Why agricultural waste and pollution risk matters

The number of livestock animals on the planet, including poultry, is currently three times greater than the number of humans.^[1] The volume of manure produced by the 70 billion animals processed by the global food system each year is equivalent to the waste produced by twice the entire human population.^[2][3]

By any standard, that is a lot of sewage to dispose of or deploy. While governments typically have strict regulations for human waste, animal waste from industrial farms and slaughterhouses remains vastly under-regulated. The scale and extent of the problem are severe but under-reported. How protein companies manage – or mismanage – animal waste has significant implications for human health, climate change and biodiversity loss, as well as for companies’ continued licence to operate as regulations around the world become stricter.

A multifaceted problem  

• Methane produced from manure storage and processing represents an estimated 10% of the total emissions from global livestock.^[4] 

• Manure from livestock is considered to be one of the main global sources of heavy metal contamination.^[5] 

• High levels of antibiotics and antibiotic-resistant bacteria are consistently found in soil and water near livestock farms.^[6] 

• Slaughterhouses in the US discharge the highest phosphorus levels and the second-highest nitrogen levels of all industrial categories in the country 

• Almost three-quarters of US slaughterhouses that discharge pollution directly into rivers and streams are within one mile of under-resourced communities, low-income communities or communities of colour.^[7] 

Animal waste naturally contains nitrogen and phosphorus, which are two key nutrients most plants need to survive. The presence of these nutrients in animal manure means it has long been regarded as an effective fertiliser for plant growth.^[8]

However, there are several impracticalities surrounding manure’s use as fertiliser often leading it to become a waste product which is disposed of at the lowest cost, subsequently, raising the risk of it becoming a pollutant.^[9]

Due to transport costs, manure tends to be applied within five kilometres of where it is produced,^[10] leading to concentrated areas of manure production and application on fields, creating nutrient hotspots. The problem of nutrient excess is exacerbated by the application of synthetic fertilisers on crops for livestock, which takes up a third of the planet’s arable land.^[11]

Without adequate treatment, slaughterhouses also pollute by discharging wastewater with excessive nutrients into local waterways. Slaughterhouses discharge the highest phosphorus levels and the second-highest nitrogen levels of all industry categories in the US.^[12]

Waste management regulation in agriculture               

Lack of regulation and enforcement around waste management has favoured the animal protein industry's expansion, but countries, local governments and other stakeholders are now beginning to legislate to reduce pollution from livestock farming – as the map below shows. 

The EU as a whole is acting on its 1991 Nitrates Directive, which requires member states to monitor their waters and identify the effects of pollution from agriculture. Spain has been referred to the Court of Justice of the European Union after algal blooms in Mar Menor were linked to the region's pork production.^[13] The EU's Farm to Fork strategy targets a 50% reduction in nutrient losses to the environment by 2030. 

Lawsuits and community opposition in relation to ecosystem degradation and biodiversity loss are also becoming more common, particularly in the US. They include action by the city of Des Moines against the state of Iowa, accusing it of not doing enough to control nutrient runoff and protect the Raccoon River from pollution.^[14] 

Smithfield, which is owned by WH Group, had to pay more than US$500 million in compensation to people living near farms with open-air lagoons – the largest direct financial impact from manure waste and pollution FAIRR has identified. The company is aiming to cover 90% of its pig farms in North Carolina, Missouri and Utah with biodigesters by 2030. However, the EPA has launched an inquiry into the biodigester plans amid concerns that they may lead to even more pollution that could affect surrounding communities.^[15]

How FAIRR evaluates waste and pollution risk 

FAIRR examines whether a company is assessing and managing its exposure to water-quality risks in its processing facilities, its feed and its animal supply chains. Investors should expect companies to identify and disclose “high-risk” locations, set quality and volume targets at the facility level and engage with suppliers on nutrient pollution management. 

More advanced practices entail year-over-year improvements for processing facilities, including an overall decrease in wastewater discharged and an increase in the quality of wastewater. Companies could also look to provide comprehensive guidance, technical support and incentives to suppliers to improve nutrient management. 

The need to manage risks throughout the production process 

Given the above impacts, regulations and other issues, protein producers involved in intensive livestock farming should be expected to assess and manage the risks associated with inadequate waste management throughout the production process. In this way, investors can be increasingly confident that a company has a handle on these issues and has information that will allow themto mitigate their risk exposure. However, the Index reveals most land-based protein producers are not taking adequate steps to address these risks. 

FAIRR’s analysis suggests producers are more likely to manage the risks in their processing facilities and less likely to manage those in their agricultural supply chains as a whole. Minimal change has been seen in risk management approaches in both areas. 

43% of land-based protein producers have completed a risk assessment to identify the processing facilities that operate in locations with high water stress from a quality perspective.  

Transparency regarding nutrient management in feed farming remains significantly limited, as 70% of Index companies do not disclose any information, although this is a 6% increase compared to 2022. The proportion of companies providing disclosure about manure management increased from 55% in 2019 to 77% in 2023, but only a fifth of those companies disclose engaging with their animal suppliers to ensure better nutrient management practices by offering comprehensive guidance and technical support. 

The rise of biogas 

Methane’s global warming potential is 27 times that of carbon dioxide, and livestock is responsible for around 44% of anthropogenic methane emissions. As such, there has been a growing focus on cutting down agriculture’s methane emissions as per the pledge at COP26^[16] to reduce methane emissions by 30% by 2030. This has driven the adoption of biodigesters in intensive animal farming to produce biogas.

Over 40% of Index companies now disclose producing biogas from manure, but less than a quarter of these – all based in Asia – disclose how they manage the remaining slurry after biogas has been extracted. This lack of disclosure is notable, as slurry might contain up to 3.5 times more nitrogen after the extraction process, meaning it could pose a much higher nutrient pollution risk if not treated adequately.^[17]

While capturing methane from waste lagoons is recognised as a better environmental practice than simply allowing methane to be emitted, leakages during digestion, transport and storage may mitigate any supposed climate benefits.^[18] As such, a narrow, carbon-centric view linked to this risk mitigation practice may exacerbate biodiversity impacts.^[19]