Sustainable agriculture is no longer a novelty, but a standard for many recipients of agricultural raw material. We talk about the challenges related to the implementation of sustainability standards among suppliers of agricultural products with Krzysztof Stańkowski, head of the Agro department at PepsiCo Polska.
What does it mean in practice that your food production system is sustainable?
The first thing that comes to mind while talking about sustainable food production is, of course, cooperation with farmers. However, in reality, the entire structure of our company is responsible for the implementation of this policy, even those areas of the company that are seemingly not related to sustainable production. We approach this issue holistically, from the point of view of our entire business activity and we optimize processes wherever possible and rational. Our basic activity in this area is contracting agricultural products – both in Poland and in the world. We have developed standards of cooperation with farmers many years ago and this area is particularly important to us. It is worth emphasizing that this was not an easy process, because on the one hand we try to be competitive on the market, and on the other hand, the contracts are followed by specific expectations that we set for farmers and require their acceptance. However, thanks to many years of consistent cooperation with farmers, we were able to develop specific standards. We regularly undergo audits of our sustainable agriculture program and their subsequent results confirm that, for example, our Polish potatoes are produced in a sustainable way. We have achieved a level of 100% sustainability in this respect. So in practice, all farms cooperating with PepsiCo in Poland meet high standards regarding sustainable agriculture.
Other element that is part of our pro-environmental processes is packaging. We are talking here about a significant impact because we are one of the world’s largest manufacturers of snack and beverage packaging. Therefore, it is a big challenge. However, we consistently take steps to ensure that the packaging we use is produced in such a way as to limit its impact on the environment and climate in the shortest possible perspective. We strive to reduce this impact to zero. The most important of our initiatives are bottles made of 100% recycled plastic, the so-called rPET and currently this solution has been implemented by us for 85% of the Polish portfolio. Switching to this type of bottles is part of our global program.
An important element in the implementation of the principles of sustainability is also the functioning of the production plants themselves. In this case, we strive to achieve almost zero-emission. Over the past few years, we have implemented a number of programs aimed at minimizing our environmental footprint. Let me give you an example – in our factory in Grodzisk Mazowiecki, we have launched our own sewage treatment plant, which means that we purify the water used in the entire production process ourselves, thus being able to close its circulation and use it repeatedly. The electricity used by both our plants and offices comes from 100% renewable sources. In turn, the thermal energy resulting from our production processes is recovered and is used, among others, for heating buildings and water.
These are just some of the ways we try to approach sustainability in food production holistically. In selected areas we are already at a fairly advanced level, and in some areas, if we have not yet achieved 100% results, we are already very close to this goal.
Can you tell us more about your plans to support sustainability in agriculture?
It is worth starting with the fact that this is a constant process for us. We regularly undergo audits to ensure the sustainability of our supply chain, including the origin of agricultural raw materials. Although we have already done a lot in this area, we are still motivated to constantly improve our processes. New suppliers are joining us all the time and this requires us to show them the standards and knowledge we expect in terms of sustainability. We also have defined plans for regenerative agriculture. We started implementing this program at the beginning of 2021 and in the initial period we worked together with farmers to define mutually acceptable rules of cooperation. This was done by reviewing our global requirements, jointly adapting them to the local conditions of Polish agriculture and checking to what extent Polish farms already meet these standards. We have found that many Polish farmers are already very advanced in applying environmentally beneficial practices. Very often, the farms we cooperate with conduct their own research independently of us which they use to draw conclusions for their activities. Therefore, we can exchange knowledge with many partners and look for even more advanced solutions. At the same time, there is also a group of farmers who, although they are already aware of the need for change, have not yet taken real steps to implement them. Therefore, we try to point to the experience of farms that have already implemented the required practices, highlight the benefits and indicate the figures that best appeal to farmers. Important arguments are, of course, yields and profitability, but farmers are also aware that farm resources cannot be exploited indefinitely and that intensive farming practices can lead to rapid soil degradation. Farms are passed down from generation to generation, so it is very important for farmers to maintain the right conditions to obtain good yields, also in the future. That is why we often encounter a situation in which suppliers already carry out specific activities and we can also learn many things from them.
What challenges are you currently facing in terms of working with farmers?
This year, due to the difficulties affecting the entire sector, farmers are particularly focused on profitability and the issue of the future of production. Rising prices of fertilizers, fuels and energy mean that all participants of the agricultural market are forced to make difficult decisions. Therefore, at the beginning of the year, we reacted quickly and introduced appropriate conditions to our contracts that would secure our suppliers. We always try to look at the changing market situation and analyze the main price-setting factors that reduce or increase the costs of agricultural production on an ongoing basis. Our agronomists working in the field meet and talk to farmers about current problems, which allows us to react quickly to any changes. A similar situation prevails on other European markets where we conclude contracts for the supply of raw materials.
What standards must your suppliers meet?
Just a few years ago every farm that started working with PepsiCo was required to join the GlobalG.A.P. certification within two years of starting cooperation. Throughout the process of preparing for certification and audit, we supported suppliers in this regard. However, at present the GlobalG.A.P certificate is already required by us at the time of concluding the contract. The change in our approach was influenced by fact that farmers already have a significant awareness of the importance of certification for the ability of their farms to compete. This is part of a broader trend that we observe on the market, because an increasing number of processors or retail chains require farmers to ensure the appropriate quality or a specific standard of raw materials at a very early stage of production. This means that a significant part of the suppliers take care themselves to obtain the appropriate certifications.
In addition to the GlobalG.A.P certificate, we also have our internal sustainable agriculture program, which we have been implementing in Poland for 7 years. This means that every farm cooperating with PepsiCo is subject to annual monitoring, checking whether it meets our SFP (Sustainable Farming Program) standards. We constantly check whether the farm requires support and what areas need improvement. Our agronomists visit farms several times a year and react to possible problems on an ongoing basis. Once a year, a summary report is prepared. This means that despite the three-year validity period of the certificate, in addition, every year we check 100% compliance with the program standards ourselves.
We are also preparing to implement solutions measuring emissions from potato crops. We are already able to monitor emissions in our internal systems for each hectare of crops, and we intend to make the developed solutions available to our suppliers soon.
In 2023, we plan to pilot the implementation of the principles of regenerative agriculture on several farms and make measurements using experimental plots. In this way, we want to see whether the principles of impact on soil emissions and quality that we have defined are applicable in practice.
What impact does sustainability have on the consumer market?
Consumer expectations play a decisive role in a number of initiatives we have taken to sustain our production, including reducing our impact on the environment and climate. We listen to what consumers say and try to make every effort to ensure the safety of our products – hence, among other things, we require the suppliers to have GlobalG.A.P. certification or the implementation of internal quality programs. These requirements also affect the way of production as well as the composition of our products – this is the reason why we have completely abandoned the use of palm oil, or changed our packaging to one that uses recycled plastic. We also conduct a number of educational activities addressed to consumers.
Thank you for the interview!