Jul 18, 2018
The world's biggest meat and dairy companies could surpass Exxon, Shell and BP as the world's biggest climate polluters within the next few decades. At a time when the planet must dramatically reduce its greenhouse gas emissions, these global animal protein giants are driving consumption by ramping up production and exports.
GRAIN and the Institute for Agriculture and Trade Policy (IATP) examined the world's largest 35 companies and found that most are not reporting their GHG emissions data and few have set targets that could reduce their overall emissions. We need to urgently build food systems that meet the needs of farmers, consumers and the planet. But to do so, we must break the power of the big meat and dairy conglomerates and hold them to account for their supersized climate footprint.
New research from GRAIN and IATP shows that:
- Together, the world's top five meat and dairy corporations are now responsible for more annual greenhouse gas emissions than Exxon, Shell or BP.
- By 2050, we must reduce global emissions by 38 billion tons to limit global warming to 1.5 degrees Celsius. If all other sectors follow that path while the meat and dairy industry's growth continues as projected, the livestock sector could eat up 80% of the allowable GHG budget in just 32 years.
- Most of the top 35 global meat and dairy giants either do not report or underreport their emissions. Only four of them provide complete, credible emissions estimates.
- Fourteen of the 35 companies have announced some form of emission reduction targets. Of these, only six have targets that include supply chain emissions, yet these emissions can account for up to 90% of total emissions. The six companies that do pledge cuts in supply chain emissions are simultaneously pushing for growth in production and exports, driving their overall emissions up regardless of their intention to reduce emissions per kilo of milk or meat produced.
To avert climate catastrophe, we must reduce production and consumption of meat and dairy in overproducing and overconsuming countries and in affluent populations globally, while supporting a transition to agroecology.
Profits versus the planet
On 25 March 2014, the top executives of the Brazilian meat giant JBS were in New York for the company's annual "JBS Day," where they announced the year's financial results. The world's largest producer of meat had a triumphant message for Wall Street: global meat consumption is going up and JBS is going to profit immensely from this growth. The Brazil-based company told shareholders that a pillar of its strategy is a projected 30% increase in per capita global meat consumption to 48 kg by 2030, up from 37 kg per person in 1999.
JBS neglected to tell its investors about a critical problem with its growth strategy: climate change. If global meat production were to expand to 48 kg per capita, it would become impossible to keep global temperatures from rising to dangerous levels. To put the JBS numbers in perspective, a new Greenpeace report finds that average per capita meat consumption must fall to 22 kg by 2030, and then to 16 kg by 2050, to avoid dangerous climate change.
JBS made no mention of climate change in its presentation but, as with the other global meat and dairy conglomerates, it should know the climate impacts of increasing production. More than a decade ago, the Food and Agriculture Organization of the United Nations (FAO) published the first global accounting of greenhouse emissions from meat and dairy, demonstrating global livestock's role in exacerbating climate change. Subsequent studies have backed up this initial assessment. Despite these findings, the biggest meat and dairy companies remain committed to growth levels that are completely at odds with the agreement reached in Paris in 2015 by the world's governments to keep the global temperature rise to "well below 2 degrees Celsius (degC)," with the goal of limiting it to 1.5 degC.
If we are to reach the 1.5 degC goal, total global emissions must rapidly decline from 51 gigatons to 13 gigatons by 2050 (Figure 1). If energy, transport and other sectors successfully cut emissions in line with the Paris objectives while meat and dairy companies continue to increase production, the livestock sector will account for a larger and larger portion of the world's available GHG emissions budget of 13 gigatons. Under a business-as-usual scenario, the livestock sector could eat up over 80% of the budget, making it virtually impossible to keep temperatures from rising to dangerous levels past 1.5 degC.
In direct contradiction to JBS's outlook for strong growth, the imperatives of climate change necessitate a significant scaling back of production from the world's largest meat and dairy companies without delay.
This report focuses on the biggest players in the meat and dairy industry. The stakes could hardly be higher: without dramatic cuts in their GHG emissions, the world may well fail in its attempts to avert catastrophic climate change. Not only do these companies have a massive climate footprint - comparable to major fossil fuel companies - but they dominate meat and dairy production in those parts of the world where there is both surplus production and high levels of meat and dairy overconsumption. These are the parts of the world where steep reductions in emissions from meat and dairy production are most necessary. This includes exports that fuel overconsumption amongst the more affluent middle and upper classes of developing countries.
The climate footprint of the meat and dairy giants
Unlike their counterparts in the energy sector, the big meat and dairy companies have thus far escaped public scrutiny of their contribution to climate change. The lack of public information on the magnitude of their GHG footprints is one contributing factor. GRAIN and IATP have reviewed the efforts undertaken by the world's 35 largest beef, pork, poultry and dairy companies to quantify their GHG emissions. We found the publicly available data on their emissions to be incomplete, not comparable between companies or years and, in the majority of cases, simply absent (Figure 9A). Only four companies - NH Foods (Japan), Nestle (Switzerland), FrieslandCampina (the Netherlands) and Danone (France) - provide complete, credible emissions estimates. However, under the current circumstances, even these four are not obligated to reduce these emissions. Most of the companies that do report emissions have seriously underreported them and have not included most of their supply chain emissions in their calculations.
These supply chain emissions, covering everything from the production of animal feed crops to the methane released by cattle, generally account for 80-90% of meat and dairy emissions. However, large meat and dairy companies have a particular responsibility to include these upstream emissions in their accounting. As vertically integrated businesses, they exercise significant and often direct control over their supply chains, including feedlot and processing operations, contract farming systems and feed production units. It is thus critical that big meat and dairy companies be held directly accountable for the upstream supply chain emissions, and denied the ability to shift blame (and costs) onto their farmer suppliers or the public.
In the absence of comprehensive, transparent data from the largest companies, GRAIN and IATP made approximate calculations of the emissions from the meat and dairy divisions of these companies. We used a new emissions calculation methodology and regional data on emissions from livestock production developed by the FAO called the Global Livestock Environmental Assessment Model (GLEAM), combined with publicly available corporate data on production volumes (see appendix). The numbers are shocking: the combined emissions of the top five companies are on par with those of Exxon and significantly higher than those of Shell or BP (Figure 4). Taken together, the top 20 meat and dairy industry emitters produce more emissions than many OECD countries (Figure 5).
Do some countries and regions matter more than others?
The full significance of these companies' GHG footprint can be understood only when we consider where these emissions are produced. Geographically speaking, most meat and dairy emissions come from a small number of countries or regions with large land masses. The main culprits are the major meat and dairy exporting regions: the United States (US) and Canada; the European Union (EU); Brazil and Argentina; and Australia and New Zealand. These regions, which JBS calls the "surplus protein" regions, have surplus production and high per capita consumption of meat and dairy. These countries account for 43% of total global emissions from meat and dairy production, even though they are home to only 15% of the world's population (Figure 6). These are also the countries where most of the top meat and dairy companies have their operations (see Box 2).
Another key country is China, now the number one emitter of GHGs from meat and dairy production after two decades of exponential growth in per capita consumption, coupled with imports from the surplus protein countries and concentration of domestic production in the hands of a few large corporations. India is another important country in terms of emissions from its rapidly growing dairy sector. But its overall per capita emissions for meat and dairy production remain relatively small compared to the surplus protein countries; moreover, the picture is complicated by the multiple functions fulfilled by cows and buffalo for Indian families.
To illustrate the centrality of the surplus protein regions and China, the United States Department of Agriculture's (USDA) Production, Supply and Distribution Database provides some startling 2017 figures. Just six countries or supranational entities (the US, the EU, Brazil, Argentina, Australia and China) account for nearly 68% of global beef production. Minus China, the five are still responsible for over 55% of world production, with the US producing the largest quantity. Just three countries (Brazil, Australia and the US) account for nearly half (46.5%) of global exports - adding India's buffalo meat exports brings the total to 65% of global exports.
For pork, the concentration is much greater, with China, the EU and the US producing 80% of the world total. The EU, the US, Canada and Brazil are responsible for over 90% of world exports, with the US and the EU accounting for nearly two-thirds. Meanwhile, only four countries - the US, China, Japan and Mexico - account for nearly 60% of world pork imports.
A similar situation exists for industrial poultry, with the US, Brazil, the EU and China accounting for 61% of global chicken production. Brazil and the US alone account for 63% of world exports; if the EU and Thailand are added, the four sources account for 81% of world exports.
Dairy is no less concentrated. The EU, the US and New Zealand account for nearly half (46%) of all global dairy production. If China is added, the share of world production rises to 52%. Where exports are concerned, the EU, the US and New Zealand account for nearly 80% of skim milk powder exports while New Zealand alone produces 68% of whole milk powder exports.
Considering all these statistics, it should come as no surprise that the "surplus protein" bloc plus China account for nearly two-thirds of global emissions from meat and dairy production. And emissions from these countries are increasing (Figure 7). If there is to be any chance of limiting the rise in global temperatures to 1.5 degC, significant cuts in emissions from meat and dairy production in these countries must be prioritised.
The concentration of global meat and dairy production and exports in the handful of countries comprising the surplus protein bloc (plus China) is compounded by the concentration of production and exports in the hands of a small number of corporate actors. In the US, just four companies process 75% of the beef, 71% of the pork and over half of the chicken. In Brazil, three companies process one-third of the country's massive beef output and just one company, BRF, processes one-third of the country's chicken. In Australia, two companies (JBS Australia and Teys Australia) dominate beef processing, followed by NH Foods and others, with the five largest accounting for 57% of processing. And just 15 companies dominated the EU 27's meat sector in 2010, with corporate concentration much more pronounced at the national level. For example, Germany produced nearly one-quarter of the pork from the EU 28 countries in 2017. Yet just four companies (Tonnes, Vion, Westfleisch and Danish Crown) process 64% of Germany's pork.
In dairy, New Zealand's staggering share of global whole milk powder exports is largely in the hands of Fonterra, which controlled 84% of the country's raw milk intake in 2015-2016. Second-tier (mainly Chinese-owned) companies such as A2 and Synlait are emerging as other dominant corporate actors in New Zealand. Forty percent of China's booming dairy market is now controlled by two companies, Yili and Mengniu.
Any scenario that brings global meat and dairy production and emissions in line with a 1.5 degC pathway requires significant cuts in emissions by the surplus protein countries' largest meat and dairy companies. Despite this imperative, there is no comprehensive reporting system across the sector, nor have many companies pledged to reduce net emissions.
Of the top 35 meat and dairy companies, 14 have announced some form of emission reduction targets. But of these 14, just six have comprehensive targets covering the full range of emissions associated with livestock production. The remaining eight companies specify reduction targets that appear to be limited to emissions produced only by their direct operations, such as offices, processing plants, company vehicles or other business activities, as opposed to animal and feed production. Excluding emissions from animal raising and feed production can underrepresent the overall emissions of meat and dairy processing companies by over 80%.
Of the six companies that do include supply chains emissions in their targets, only two have made robust commitments to reduce their absolute emissions. Switzerland-based Nestle, the world's largest food company, has committed to reducing absolute emissions by 50% by 2050. Danone, the world's second largest dairy company in terms of revenue, appears to have gone the furthest in reporting emissions and setting targets. It alone among the top 35 has committed to "zero net emissions" by 2050 (a target consistent with the one laid out in the Paris climate agreement). These reductions extend to its reported supply chain emissions from dairy. Danone's supply chain emission calculations appear to be roughly consistent with GRAIN and IATP calculations.
But a glaring problem remains: Nestle and Danone's commitments are voluntary. Without legal regulations backed by strong sanctions, and absent independent systems of monitoring and verification, little can be done to hold these companies to their word.
And there are other accountability problems, starting with Danone's action plan. If Danone were to take direct responsibility for zero net emissions by 2050, it would have to begin with a business plan that included cutting its output. But Danone plans to increase production. Rather than taking direct action itself, Danone's plan apparently assigns the financial burden and investment risks associated with the needed reductions to its farmer suppliers. These farmers will be expected to reduce their emissions per litre of milk, thus reducing emissions intensity, while their absolute emissions will increase if they continue to produce more milk from more animals. Danone's only other commitment to reaching net zero emissions appears to be an allotment for questionable offset programmes (more on Danone in Box 3).
Other companies in the meat and dairy sector also have flawed plans. For example, New Zealand based Fonterra, the world's largest dairy exporter, plans to increase its production by a spectacular 40% in ten years (2015-2025). The company claims that it will make this growth "carbon neutral" through reductions in on-farm "emissions intensity," without providing specifics on how such reductions will occur. Similarly, US-based Smithfield Foods, the leading US pork producer and exporter, and a subsidiary of the world's largest pork company, WH Group, has pledged to reduce absolute GHG emissions from its US-based operations by 25% by 2025 (compared to a 2010 baseline), offering few details about how it intends to achieve this reduction.
Based on a careful review of Smithfield's public documents, the company appears to be reporting on its full range of emissions from its US products. However, by limiting its emissions reduction pledge to the US, the company is excluding a significant part of its emissions generated by its parent company, Chinese-owned WH Group. WH Group's Chinese operations generated 43% of the conglomerate's profits in 2017. In addition, Smithfield's reporting excludes emissions from large operations in Poland, Romania and Mexico.
Not only are the three largest conglomerates in the industrial meat and dairy sector - JBS, Tyson and Cargill - the largest global emitters, but they also have the weakest targets, or no targets at all. JBS, the world's largest livestock processor, has no publicly stated medium- or long-term company-wide emission reduction targets. Although JBS claims to report on Scope 1, 2 and 3 emissions, its total reported emissions are approximately 3% of those calculated by GRAIN and IATP, which are based on the company's annual production volumes (Figure 9B). Either the company has excluded most of its supply chain emissions from its calculations, or its publicly reported emissions data is inaccurate. US-based Tyson announced in 2018 that it would reduce its GHG emissions by 30% between 2015 and 2030. Tyson does not report on its supply chain emissions, nor does its reduction target include them. Finally, Cargill, the largest private company in the US and the second largest meat processor worldwide, appears to be following a model similar to Tyson's: it too fails to report on supply chain emissions or include them in reduction targets. Cargill's exclusion of these emissions from reduction targets is particularly noteworthy given the company's own admission that they "account for roughly 90 percent of emissions across [its] value chain."
Growth at all costs
The only common element in this jumble of corporate promises and inaction on climate change is a commitment to growth. Tyson expects annual growth of 3-4% from beef and poultry sales, while Marfrig targeted 7.5-9.5% annual growth for 2015-2018. This target was set prior to the company's acquisition of US-based National Beef, making it the second largest beef processor in the world. Danish dairy giant Arla plans to add 2 billion kg of milk to its European supply chain between 2015-2020 - a 14% increase. As already mentioned, Fonterra projects a stunning 40% increase in its processed milk volume for 2015-2025.
Many meat and dairy companies expect to derive much of their growth from exports. Jim Lochner, chief operating officer of Tyson Foods, explains the corporations' logic as follows: "The old paradigm was that profitability and production are driven by domestic demand. The new paradigm is that they're largely driven by grain costs and exports."
To ensure continued export growth, the companies turn to governments to knock down anything seen as a trade barrier, particularly through the negotiation of trade agreements. As trade deals have opened up new markets, exports have become a greater percentage of total production from countries where the top companies dominate, for example with pork in the US.
The EU is no exception. At a time when the EU should be grappling with tough choices on how to reduce its consumption and production of industrial meat and dairy, and supporting the livelihoods of European farmers, it is instead negotiating numerous trade agreements to boost EU exports. This includes the 2017 agreement with Japan, which slashed Japanese duties on meat and dairy imports from the EU. "This agreement is positive for Danish Crown in every way," CEO Jais Valeur gushed, as he expects to see major increases in pork exports from the deal.
The 2010 EU-Korea agreement translated into a sevenfold increase in cheese exports to the Asian nation. The same holds for US beef exports to Korea, which have also increased sevenfold since the two countries signed their deal in 2007. In each instance, these agreements benefit large companies and large-scale farm operations, putting additional pressure on small farms to either become much larger or leave agriculture. Consider the example of the Canadian pork sector, which was dramatically transformed by the signing of the Canada-US Free Trade Agreement in 1989, the North American Free Trade Agreement (NAFTA) in 1994 and the Marrakesh Agreement (which created the World Trade Organization or WTO) in 1995. In the decade after 1999, nearly half of the 30,000 Canadian farms producing pigs disappeared. US agricultural census data shows a similar trend: in 1992, just 30% of pigs were raised on farms with over 2000 animals. By 2004, 80% of all pigs were raised on such large farms. Today, that figure has risen to 97%.
These deals cut both ways: the EU's trade agreement with South America's Mercosur countries (Brazil, Argentina, Paraguay and Uruguay) is unlikely to happen unless Europe opens its market to South American beef. Brussels has reportedly agreed to an influx of 99,000 tonnes per year, on top of the 230,000 tonnes it already imports from the region. The Canada-EU trade deal, now undergoing ratification, affords Cargill and JBS - both dominant players in Canadian beef and pork processing - greater access to the EU's beef and pork market, as well as a commitment to eliminate further regulatory barriers to doing business; the result will be to pump additional quantities of meat into the EU.
Neither the governments negotiating these deals nor the corporations operating within their jurisdictions have made any serious attempt to assess the evident contradiction between the ensuing growth in meat and dairy production and the actions necessary to avoid dangerous climate change. Instead, the companies and the governments continue to justify growth by invoking misleading and insufficient reductions in emissions intensity.
Emissions intensity targets count emissions per kilogram of meat or milk, but they do nothing to curtail overall growth in company emissions, sales, processing volumes, revenues, or profits. While intensity may be kept in check or even reduced, total emissions will continue to rise in tandem with production. It is easy to see why corporations focus on reducing intensity rather than reducing total emissions.
An emissions intensity approach also provides a justification for exports. If New Zealand is a lower-intensity producer of milk than China, the reasoning goes, then the climate will benefit by having China import from New Zealand rather than producing its own milk. This argument could be adduced to claim that Chinese trade barriers or national emissions reduction schemes unfairly penalise New Zealand dairy producers.
The reality is that China has become a dumping ground for major dairy exporting nations and regions, including companies based in New Zealand, the US and the EU, which are anxious to sell their excess production. The glut of cheap powdered milk, whey and other dairy products available on the international market has, with the blessing of the Chinese government, turned into a wave of processed dairy foods that is flooding the Chinese market and displacing traditional non-dairy foods, many rich in calcium. Two of the fastest-growing dairy products in China are infant formula and mozzarella cheese for pizzas. Driven by cheap imports, China's demand for dairy is projected to grow by 27% and its imports by 50% between 2016 and 2026.
Arguments for emissions intensity reduction in the absence of targets to reduce the livestock sector's total emissions are dangerous, because reducing emissions per unit of food is simply inadequate. Over the past century, farmers and corporations have reduced the emissions intensity of livestock production and processing, but these gains have been overwhelmed by increases in absolute emissions as a result of the doubling, and then the quadrupling, of production and consumption. We are emitting less per kilogram, but overall, we are emitting more GHGs because we are producing and consuming many, many more total kilograms.
Consider the case of chicken. In 2010, the global average GHG emissions per kilogram of chicken were one-third to one-half what they were in 1961. But the total GHG emissions from chicken production in 2010 were nearly five times higher than in 1961. The reason? Overall chicken production was higher - nearly 11 times higher than in 1961, or 5 times higher on a per capita basis. As emissions intensity was falling, emissions were rising. Even taking population growth into account, the average person was simply eating much more meat than before.
The situation is similar with beef (Figure 11). This is the problem with emissions intensity targets. Over the medium and long term, they can coexist with significant increases in overall emissions. If emissions intensity reductions are to make a meaningful contribution to addressing climate change, they must be part of a limit on absolute emissions and not the sole solution.
Over the coming years, this contradiction between the corporate imperative to grow (and hence focus on emissions intensity) versus our ecological and social urgency to reduce absolute emissions will become starker. The most important consideration is that the large gains in "efficiency" realised by industrial farming in the twentieth century will be hard to repeat without major ecological, social and health impacts. While there are efforts underway to identify farm management practices and new technologies, such as vaccines or feed additives, that might reduce emissions intensity on industrial farms supplying the big meat and dairy companies, the science, economics and scalability of these options are far from certain. The expectations of a 30, 40 or even 50% near-term reduction in emissions intensity, on which some meat and dairy companies have staked their emission reduction targets, should be regarded with a healthy dose of scepticism.
What is more certain is that farmers - not the big companies they supply - will have to bear the considerable costs, paperwork and labour involved in implementing these practices and technologies. For the animals on these farms, which are already pushed to their biological limits, any efforts to make them more productive are likely to exacerbate the extensive animal health and welfare problems they already face.
So how do we get out of this?
There are several possible pathways to bringing emissions from meat and dairy production down to levels that are compatible with global efforts to prevent dangerous climate change. All of them, however, require significant reductions in meat and dairy production and consumption in the overproducing and overconsuming countries. Reduction in both production and consumption in the United States, the EU, Australia, New Zealand and Brazil alone would result in dramatic cuts in global emissions. Other countries must also take care to keep consumption and production at moderate per capita levels, in line with their nutritional requirements and the Paris Agreement goal of limiting global warming to 1.5 degC.
Current industrial levels of production cannot be sustained, nor can growth models for meat and dairy remain unchanged. The paradox of the corporate business model based on high rates of annual growth versus the urgent climate imperative to scale back meat and dairy production and consumption in affluent countries and populations is untenable.
For farmers, the growth of the big meat and dairy operators continues to be an unfolding disaster. In Europe and North America, the relatively few small and medium-sized producers who are not wiped out by agricultural policies that are biased in favour of agribusiness, often find themselves trapped in unfair supply arrangements dictated by these companies, with limited access to other buyers. In countries like Kenya, China, India or Brazil, small livestock producers are being pushed off their land to make space for the expansion of industrial farm operations; in many countries of sub-Saharan Africa, they simply can't compete with the subsidised meat and dairy dumped on their markets.
Farmers can and should, if stable markets and decent prices are guaranteed, supply moderate quantities of meat and milk into local food systems. But they do not enjoy these conditions. And instead of having to bear the costs of intensifying their emissions to protect the growth agendas of the big meat and dairy companies, farmers can, with the support of public programmes, shift to agroecological practices and mixed farming systems that can lower the emissions and overall environmental footprints of their farms, as well as provide much better living conditions for animals.
Nor are consumers benefiting from the corporate production of cheap meat and dairy. Overproduction and overconsumption of meat and dairy pose significant threats to public health, not only as major contributors to cancer, obesity, diabetes, high blood pressure and other health problems, but also because factory farms have become a leading source of antibiotic resistance and highly pathogenic diseases. Many consumers try to address these problems by making specific dietary choices. But this, on its own, is a limited solution. We must join forces to fix the food system so that it can supply everyone with moderate amounts of high-quality meat and dairy, in a way that respects people, animals and the planet.
Workers, too, need an exit from the repressive conditions of modern meat and dairy factories. The industry is among the most dangerous and least protective of workers, and attracts some of the most marginalised populations. Workers are required to slaughter and process hundreds of animals an hour, for measly wages and under difficult conditions. If we slow things down, reduce the scale, focus on quality and bring care and craft back into the trade, meat and dairy processing can once again afford good jobs and dignified work.
As this report has noted, cheap meat and dairy comes at a high cost due to social, environmental and animal welfare problems that continue to be under-regulated. In addition, this production is only made possible because the corporations receive an indirect subsidy from taxpayers in the form of government-funded price supports that keep grain cheap. It is past time to regulate the industry and redirect the massive subsidies and other public expenditures that currently support the big meat and dairy conglomerates towards local food and farming systems capable of looking after people and the planet.
We are not going to achieve these radical transformations of our food system without a fight with the big meat and dairy companies. These are powerful actors with deep political connections, working hand in hand with governments to protect their interests (see Box 4). Breaking their grip will require a big, collective movement of farmers, workers and consumers. This is a movement that has been building for some time but has struggled to overcome the political power of the corporations. Climate change brings a new urgency to our organising efforts.
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