Shareholder Activism Leads To Crop Protection Product Changes

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“I think all agriculture products are going to face this challenge, not just potatoes.”

– Yves Leclerc

It all began with a filing at the U. S. Securities and Exchange Commission.

A group of unlikely McDonald’s Restaurant shareholders – including a college investment fund, an ethical investment adviser and a labour group registered a “shareholder’s request,” as it’s known. They wanted the corporation to debate and vote on a resolution to report on pesticide use in the restaurant’s supply chain.

Their reasons for making the request were varied – everything from “socially responsible investing” to a desire to lower worker exposure to potentially dangerous products.

“They were not typical shareholders, and they asked that McDonald’s, within one year, produce a report on policy options to reduce pesticide use in their supply chain,” Yves LeClerc, McCain Foods director of potato agronomy told the recent Manitoba Potato Days meeting.

Since this request was coming from shareholders, McDonald’s was legally required to investigate the situation and report back. It began by contacting its suppliers, including McCain Foods, says LeClerc.

The first step was to try to establish a baseline and see what direction crop protection product use was trending. In the U. S. there’s fairly good public data from the USDA – but that’s not the case north of the border.

“In Canada, there’s no public data,” LeClerc says. “Fortunately McCain has records back to the 1970s and we were able to get a bit of an idea of how we’ve evolved over the last 40 years.”

Less active ingredient

Crunching the data, it became apparent that total pesticide use, as measured by amount of active ingredient per hundredweight of potatoes produced, had been falling steadily. That was partly because new pesticides had lower levels of toxic active ingredient in their formulation and partly because there have been great strides in productivity in the sector; production per acre has been steadily rising.

“That’s a very good story for the industry,” says LeClerc.

While the news was relatively good, there were still questions remaining, especially about the lack of good public data, which meant McDonald’s favoured pursuing another route.

“It was decided that they should look at the IPM (integrated pest management) strategy,” says LeClerc. “McDonald’s wanted to have an IPM working group that could find a solution that was acceptable to all parties.”

Which category are you?

McDonald’s struck a working group that consisted of representatives of the entire supply chain from the grower organizations, through the processors and to the restaurant company, as well as environmental organizations. They designed an online survey that could be used to determine best-management practices for crop protection product use in the potato industry on both sides of the border.

“It is quite elaborate – a total of 173 questions on all aspects of IPM,” says LeClerc. “It is a very detailed survey, about all the activities on a farm that can impact pesticide use.”

The survey will rank producers into a handful of categories: “basic,” “steward,” “expert” and “master.”

A grower who qualifies at the basic level is following all existing regulations, and basic food safety requirements.

A steward is engaging in slightly more complex activities, including documentation of crop protection practices that goes beyond the bare legal minimum.

An expert is a farm that has established important goals and is applying environmental sustainability principles to the farm.

A master level operation would be certified for its sustainability and environmental practices and would have clearly documented a significant improvement in its environmental practices.

One important overall goal is to determine the average level of attainment for both the overall industry in both Canada and the U. S. as well as a market average for individual growing areas.

The survey will be available in the “second half of 2010” and LeClerc says McDonald’s has asked all its potato suppliers in North America to ask growers to participate in the survey. LeClerc stresses that the individual information will be directly available only to the groups administering the survey – the National Potato Council in the US and the Canadian Hort Council in Canada – and would be available to the processors and McDonald’s only in global form.

Ultimately LeClerc says Canada is “well placed” to provide excellent documentation because it already has similar programs such as environmental farm plans. Eventually these sorts of programs could all evolve into a single standard applied across the board – and while it might not seem like it, potato growers do have some reason to be optimistic, since their supply chain is a fairly straightforward one with just a handful of major players to satisfy.

“I think all agriculture products are going to face this challenge, not just potatoes,” says LeClerc. “In the potato industry we’re relatively lucky because of our short supply chain. It’s places like the grain industry where this is going to get really challenging.”

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