Water availability is a fundamental business requirement for any agricultural operation. Animal agriculture is particularly water intensive, with 98% of water going towards feed production. One-third of the total volume of water used for livestock production is towards beef production.
Climate change will exacerbate the availability and cost of water. We’re already seeing this play out for companies in the Index – In 2018, Australia’s largest beef producer, Australian Agricultural Company, experienced a 46% increase in production costs due to increased feeding and transport charges resulting from drought. Feed prices for Singapore-listed company QAF (which owns pig farms in Australia) increased 55% from A$225/ton to A$350/ton in 2018 due to drought.
We assess meat and dairy companies on their targets and disclosure to address water scarcity risks in their facilities as well as their animal and feed farming operations.
We look for risk differentiated targets, since water scarcity is a highly localized issue which requires companies to set context-based targets and metrics based on location-specific risks.
- Where companies do address water scarcity, these initiatives are only focussed on their direct operations, with companies receiving average scores of 5% on water saving measures in feed farming.
- 12 meat and/or dairy companies have set specific time-bound water use targets for their facilities, but only two companies, Hormel Foods and Tyson Foods seem to have targets that are ‘risk differentiated,’ i.e., based on local context.