McDonald’s and the beef supply chain share a problem and an opportunity wrapped in the same package.
McDonald’s wants to sell more beef. Presumably, so do beef producers.
But McDonald’s customers, according to Bob Langert, vice president of global sustainability, want to know the beef in their hamburgers is sustainable. So, in order to sell more beef to a broader customer base, McDonald’s plans to start sourcing verified sustainable beef in 2016.
The problem, of course, is that there is currently no universally accepted definition of what sustainable beef is or should be, much less any metrics by which to measure how close or distant beef is from that definition and those measures.
Trying to define “sustainable”
Back in 2011, McDonald’s, along with other big-name companies, organizations and individuals founded an organization called the Global Roundtable for Sustainable Beef (GRSB). This is the organization—comprised of stakeholders from across the beef supply chain—that McDonald’s is looking to for a definition of sustainability.
Other GRSB members include Cargill, Elanco, JBS, Merck, Rabobank, Walmart and the National Cattlemen’s Beef Association. Another member is the World Wildlife Fund (WWF), which gives cattle producers plenty of pause. However, folks involved in the organization tell me its structure is such that no member or group of members that comprise what are termed constituencies can force their own agenda on the group at large.
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The possibility to participate as an observer member also exists, but the framework of the GRSB consists of five constituencies:
• Producers and producer associations,
• The commerce and processing sector,
• Retail companies,
• Civil societies and
• National or regional roundtables.
GRSB’s vision is: “…a world in which all aspects of the beef value chain are environmentally sound, socially responsible and economically viable.”
GRB’s mission is: “...to advance continuous improvement in sustainability of the global beef value chain through leadership, science and multi-stakeholder engagement and collaboration.”
GRSB is crafting a definition of beef sustainability, or at least principles and guidance en route to that end, which will be released for public comment in March.
For perspective, in November 2010, GRSB convened a global meeting of more than 300 interested parties.
“This was an unprecedented event and a great first step in our journey to achieve a more sustainable beef industry,” said Jason Clay at the time. He’s WWF’s senior vice president of markets. “On a planet with finite resources, global beef stakeholders understand the business, social and environmental value of doing more with less. Through this multi-stakeholder process, we will build on existing practices and drive continuous improvement throughout the global beef system.”
Societal, economic and environmental aspects are the three key aspects of sustainability focused on by the group.
“This is a powerful first step in bringing all the key stakeholders of the beef sector together for a transparent dialogue and to identify the real potential of the beef industry to be more sustainable,” said Gary Johnson, senior director of McDonald’s worldwide supply chain.
“By incorporating sustainability into Walmart’s own operations, we have seen firsthand the opportunities it creates to increase efficiency and reduce costs,” said Pete Eckes, Walmart's senior director of business development for meat. “By making the sustainability practices of producers and suppliers a factor in deciding which beef we buy for our 8,500 global locations, Walmart and Sam's Club can provide the access to customers that is needed to make this effort a success.”
Achieving sustainability requires the entire supply chain
Rather than go to all of this trouble of arriving at a wide-ranging consensus, some in the industry might argue: “If McDonald’s wants to sell sustainable beef, then why don’t they establish a program, pay a premium to get it, and satisfy their customers?”
For one thing, even though McDonald’s buys approximately 2% of all beef produced globally each year, they only purchase about 2%. Big as they are, they aren’t big enough to mandate.
Besides, Bob Langert, McDonald’s vice president of sustainability, explained to BEEF magazine in February, “We’re in the restaurant business. That’s what we know. We’re not in the cattle business. That’s what you know.”
Plus, Langert says McDonald’s believes sustainability should be mainstream, not a niche product defined and reserved for a handful of elitists.
Next, if the consumer wants it, like safety and affordability, sustainability becomes part of the new price of admission to participate. You can like it or hate it, but it doesn’t change the reality.
Finally, in my estimation at least, cattle and beef producers would miss a huge opportunity if they were excluded from the process or chose not to participate.
Obviously, there’s the practical production insight that would be missing. More important, though, would be ignoring the opportunity that goes with having allies with such consumer reach.
When’s the last time you thought of McDonald’s or Walmart as a customer? More important, when’s the last time you thought about McDonald’s as an ally?
That’s exactly what they are, though. As Langert told producers gathered for this year’s Cattlemen’s College in Nashville, TN, which was sponsored by Zoetis, “Beef is at the core of what we do past, present and future. We want the beef industry and McDonald’s to prosper as a result of ensuring that beef is sustainable long-term.”
Their success—selling more beef—depends on their suppliers—beef producers—remaining successful. McDonald’s understands that any definition of sustainability that makes business economically untenable for its suppliers means the same reality for their own company. For much of its history, a guiding McDonald’s philosophy has been: “We’ll be successful if our company does well, our owner-operators do well, and our suppliers do well.” The success of each is interdependent.
You can read more of McDonald’s views from Langert in the April issue of BEEF or online.
As mentioned earlier, economic viability is also recognized as a sustainability necessity by GRSB.
“We all need to do this in a way that is profitable and economic for our business model and for our suppliers’ business model,” Langert says. “Just thinking or saying you’re sustainable isn’t good enough; you have to have evidence points. It’s not just saying, ‘trust us,’ it’s proving it. Sustainability should be a mainstream part of our business and what we do.”
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