Miljøprojekt, 900 – Produktorienteret miljøindsats i landbrugssektoren - forudsætninger

Product-Oriented Environmental Efforts in Agriculture - Prerequisites

Summary

Introduction
According to the Danish Environmental Protection Agency there are still a number of environmental problems, which are difficult to handle. They are characterised by being connected to the environmental impact from diffuse sources and to the general consumption of resources in the community. A substantial part of these problems are linked to the use of products in all functions of the community. According to the Danish EPA it is therefore necessary to reduce the environmental impact of production, consumption and disposal of products. The effort shall ensure that the environmentally friendly products can be sold in competition with the environmentally inferior products, and in such quantities, that environmental improvements are achieved. Thus, it is necessary to focus on the market on which the products compete as well as on the players who influence this market.

An increased product-oriented environmental effort holds long term commercial possibilities, which will enable the Danish trade and industry to cope in the increasing international competition. The competitive advantage lies in being prepared when the demand arises.

A product-oriented environmental effort is based on the interaction between the products, the players and the market. The impact of the product-oriented environmental effort will depend on the success of getting several groups of players actively involved and of establishing a market dynamic with a demand for clean products.

The objective of a product-oriented environmental effort is to reduce the environmental impact per product, and thereby avoid under-optimisation between different processes in the product chain, between different substitute products, and between different types of environmental impact.

A product-oriented effort will therefore, typically, be a supplement to the existing environmental effort, which is based on a specific production or process or a desire to reduce the load per hectare.

A product-oriented environmental effort is a challenge for all the players in the product chain. Not only shall they exchange and handle information about the environmental impact of the product "upstream" and "downstream" in the product chain, but they shall also decide whether they can and will act on the knowledge provided by this exchange of information. The general approach, which is a prerequisite for a product-oriented effort, creates an opportunity to render the

choices made by the players in the product chain visible and document them.

Product-orientation in agriculture
In agriculture and horticulture the product-oriented approach is a challenge. At present optimisation of production is mainly based on economic concerns. The environmental impact is often just a limiting factor or framework for requirements. The environmental impacts are optimised per farm, per hectare, per substance or per company/department.

Requirements for documentation of environmental impact per product unit are typically not encountered within the food processing industry. In the food area documentation of environmental impact is not perceived as an important sales parameter (market pull), but as a parameter where it is necessary to keep up with the other suppliers in the market (market push)^[7].

This report has been prepared. in order to strengthen the product-oriented environmental effort in agriculture and horticulture. It offers a general view of the existing knowledge and tools, relevant to a product-oriented environmental effort in agriculture. It also assesses the opportunity and need for launching new product-oriented initiatives within the area. The main target group of this report is the product panel for the agricultural sector. Other relevant target groups are decision-makers and researchers within the environmental, agricultural and food area as well as authorities.

This report thus describes the present prerequisites for promoting a product-oriented effort. The prerequisites are used to assess the opportunity and need for launching new product-oriented initiatives within the area. The opportunities and needs are gathered in a so-called foresight of the area, which is published separately as "Product-oriented environmental effort in agriculture – foresight".

The report and the foresight are the basis of the work in the product panel for the agricultural sector, which the Danish EPA appointed in the beginning of 2003 to strengthen the product-oriented environmental effort in agriculture. Information about the work of the panel can be found on their homepage, www.produktpanel-landbrug.dk .

In the report the agricultural sector is defined as primary farms and market gardens and as the sector, which prepares and transforms raw material from the agricultural and the horticultural industry. The report includes all agricultural products, however the focus is on food. Health, animal welfare etc. is not included, but is taken into account when relevant.

The focus of the project is narrower than a complete "earth to table" consideration, and a product panel has been appointed for the retail trade, to investigate this area.

Relevant political initiatives and means
The report briefly describes the relevant political instrumentss and the national as well as international political initiatives, which focus on the development of clean products etc.

The current interest in finding forms of regulation based on i.a. loss of nutritive substances is in accordance with a product-oriented approach. A product-oriented regulation may, due to its general approach, be easily extended to other environmental aspects than those included by the current environmental regulation. It would in particular be relevant to include ammonia evaporation and phosphate discharge, impact on biodiversity, and the emissions related to the agricultural energy consumption.

A series of national and international initiatives with the purpose of promoting a sustainable development include efforts concerning an increased product-orientation of the environmental effort.

The following is an example of this:

The Danish national strategy for sustainable development "A Shared Future – Balanced Development^[8] ", published by the government in June 2002 states that a sustainable development of the food production requires a proper regulatory framework, a visionary utilisation and development of the technological possibilities, and that all links in the product chain take responsibility. The objective is to contribute to promoting the position of the Danish food industry on the export markets, and the possibilities of the trade to create increased growth through adaptation to the market requirements – in consideration of environmental sustainability in the production.

This is supported by the report "Green Market Economy^[9] ", which was published in April 2003. It establishes that the public services should form the framework for the environmental effort, in a way that allows the market to find the best solutions - in an economic, as well as an environmental perspective. According to the report the market for environmentally friendly products and production processes holds a considerable growth potential for Danish companies, both within the domestic and the global market.

The sixth environmental action programme^[10] of the EU, concerning clean products, focuses on two main areas. First, an upgrade of the consumer communication/information about the products, is in focus. Secondly, a strengthening of the manufacturers' economic incentives to use clean technologies and the like, is desirable.

In connection with the work of the EU Commission on Integrated Product Policy a proposal is made - in a greenpaper^[11] - for a strategy, which should strengthen and put renewed focus on product-oriented environmental strategies, and thus further the development of a market for clean products. The strategy is founded on the Integrated Product Policy (IPP), and is meant as a supplement to existing environmental strategies, as it should open for utilisation of higherto unnoticed opportunities for improving a broad range of products and services throughout their entire lifecycle. The key element of the proposal is the question of how to efficiently ensure that clean products are developed, and that the consumers buy them. IPP also promotes the use of initiatives and tools aiming at the total lifecycle of the products.

The Ministry of Science, Technology and Development has carried out a so-called "Green technological foresight" published in May 2003^[12]. As particularly promising areas of technology the panel behind the report has pointed towards i.a. environmentally friendly farming and design of green products and materials. The panel believes that these areas of technology can reduce the environmental impact radically in the future, and at the same time bring Danish companies further ahead on the global market for sustainable products and services.

Product chains and players
As previously mentioned the product-oriented approach considers the environmental impact of all processes in the value chain of foods, enabling us to counter the environmental problems at a general level, partly by increased targeting of the process-oriented effort, and partly by affecting the efficiency of and among the different links in the product chain. And partly by altering the composition of foods and diets.

The report presents some of the key processes in the product chain of agricultural and horticultural products. In addition, some of the most central actors in the product chains are examined, focusing on the environmental results achieved by the previous environmental effort, and on the potential for development, which may still be realised in a process-oriented effort as well as inan product-oriented approach proper.

No product-oriented environmental efforts have yet been implemented in the primary agricultural sector. Knowledge of the concept and the working methods behind "cleaner products" are not widely spread. The environmental efforts that have taken place during the last 15 years have focused on regulating the individual farmer's use of and conduct with certain polluting substances such as nitrate and pesticides. Even though the environmental efforts have till now been targeted on reducing the environmental impact per hectare, the environmental impact per product unit has also been reduced. As an example farmers have succeeded in maintaining almost unchanged crop yields with areduced use of fertilizer, pesticides and energy.

Provisional investigations show that the environmental impact per product unit varies considerably between farms. This indicates a further potential for improvements. The actual development in environmental impact throughout the years and the potential for improvements have not been investigated.

A prerequisite for a targeted product-oriented environmental effort at farm level is the access to tools for planning and decision support, which can calculate key figures concerning environmental impact per product. Calculation of these key figures is not yet implemented in computer programs used by the agricultural sector.

To disseminate a product-oriented environmental effort it is essential to have one or more motivating factors. This could be price premiums, guaranteed access to markets, or better conditions for production, which could for example be established through environmental regulationthat makes it attractive for the farmer to minimize the environmental impact per product.

The report reviews some technical and agricultural possibilities of reducing the environmental impact of agricultural production in a product-oriented perspective. There is still a potential for reducing e.g. ammonia evaporation, the surplus of P and Cu from feeding livestock as well as the consumption of pesticides, provided that a product-oriented strategy is established, based on jointly fixedrequirements and compliance with the requirements throughout the chain.

Horticulture differs from agriculture, primarily by being more intensive and by a larger diversity in crops. The individual crops have very different needs for i.a. nutritients, light and heat, resulting in large variations in the environmental impact per produced unit.

The most important environmental problem of horticulture derives from the consumption of energy, as a significant part of the Danish production takes place in heated greenhouses with considerable energy consumption. The market gardens usually assess environmental impact per hectare and/or per year, and, i.a. due to the diversity of products produced by the market gardens, it will require a great effort to convert these units to data on environmental impact per produced unit of different products,

For many years, computer technology has been used for resource management and optimisation of the production in the agricultural sector. The software packages include farm planning, fertilizer planning, crop protection planning and feed planning, several are today available on the internet.

In recent years the tools have been developed further, to include environmental aspects in a direct fashion, by integrating modules for actual environmental reporting in the software packages. One of the most important examples is the integration of the module called "Green accounting" in the software package "Farming". In this software module the farmer can enter data on nutritients, pesticide consumption, energy consumption, water consumption, and production of waste per year or per hectare. With the purpose of rendering the farmers capable of determining and reporting the agricultural environmental impact per produced unit, a project with the title "Green accounting in LCA perspective" has recently been carried out. The intention is to implement the new calculations in the existing module "Green accounting".

The processing industry in Denmark is characterised by a substantial energy and water consumption. Over the last 15-20 years businesses have been focusing on reducing consumption of resources, mainly by introducing clean technologies in the form of process equipment and environmental management. The environmental activities are focused on the process and only to a certain extent on the product. Another characteristic feature is that environmental activities take place on-site with no connection to the overall product chain.

Great reductions in the consumption of water have been accomplished by the slaughterhouses. Requirements for food safety, for health and safety at work and for a constantly widening product mix will, on the other hand, limit the extent to which the individual business can expect further savings. The same applies to the non-food processing industries, where focus is also on the process rather than on the product.

In Denmark a broad range of tools, guidelines, paradigms and collections of examples etc., within the areas of clean products, clean technology, environmental management etc., are available to companies – also some specifically developed for agriculture and horticulture. Different types of tools are employed depending on the purpose and level of ambition of the environmental effort.

The environmental impacts of the wholesale and retail trade are limited for most products, when these are viewed in a general perspective. But there is undoubtedly a potential for reductions. The most important potential for environmental improvements in the trade probably lies within its position to set requirements to the suppliers further back in the product chain, to communicate with the consumers, and to present environmentally friendly products in an attractive way. Thus, there is a need for a considerable effort before the wholesale and retail trade can contribute with information for a product-oriented effort in the food sector.

Transport is needed between most processes in the product chain of foods. And the total amount of transport related to food can be considerable. Danish distributors (of which many belong to the individual production companies) have gradually reduced their contribution to the environmental impact by continuously making transport more efficient, by improving the fleet of cars and by using diesel with less sulphur. However, there is still a large potential for improvement, partly through the technological development of means of transport, partly through improved transport practices, and partly in the composition of transport.

Transport systems are, however, often quite complex and for most foods there is still some distance to go before it is possible to set up representative transport scenarios, which can be used for a product-oriented effort in the food sector.

The consumers have the possibility to influence the total environmental impact of foods, by technological and behavioural adjustments in purchase and preparation of food. And as a result of the fact that different foods make different contributions to the environmental impact, the consumers also have a considerable influence on the total environmental impact of a meal, through the composition of the diet - partly by choosing between different suppliers and/or manufacturers of specific products, and partly by choosing between different categories of food.

Regarding the environmental impact of the consumption of foods, the consumers have only been focusing on a few parameters in recent years, for instance the Ø-label, which documents a form of operation in the primary sector. In the years to come we will obtain a broader insight into the environmental impact of foods throughout all the links of the product chain. This will provide the consumers with an opportunity to include environmental aspects on a more comprehensive basis when planning their purchases and diet.

The catering business represents a separate group of consumers. So far no product-oriented analysis of the catering business has been carried out, and significant unexploited possibilities of improvement probably can be used.

Apart from the organic products, only few examples exist of environmentally friendly products that have become generally accepted by the consumers and have given the agricultural sector a competitive advantage.

Throughout the 1990's there have only been a limited number of product-oriented initiatives within agriculture, aiming at producing and documenting products with reduced consumption of resources and reduced environmental impact. Examples are organic farming, Integrated Production of vegetables (IP), the MPS system for flowers, NATUR+ licensed cereals and a number of specific livestock products, including GMO-free pigs and welfare pigs (mostly or export).

In general the product-oriented concepts that have been based solely on the farmers' initiatives have not gained the expected price premiums, thus the support from the farmers have declined. However, some of the product labels such as IP in horticulture are considered necessary for maintaining market access or market shares.

Some products such as Natur+ cereal, organic milk and welfare pigs have managed beyond the pilot phase i.a. because they rose (partly) from a market pull, and because the requirement specifications for the agricultural sector were developed in collaboration between retail and production sectors (except organic production).

In the livestock area the market pull regarding special products derives mainly from the consumers' interest in animal welfare and food safety, but environmental issues may also be part of the requirement specifications to a certain degree, i.a. because of a demand within the retail sector. Concepts such as IP and organic production are not in themselves product-oriented, because they do not report consumption of resources and environmental impact per product. Instead these types of certification are based on regulations for production planning and management of consumption of supplies.

So far the market for environmentally certified agricultural products has been limited. Therefore the report is based on the market for organic foods. In 2002 organic foods had an average market share of 5%, the lowest share was 0.4% for pork, while the highest share was 27% for oatmeal. Two consumer segments are particularly interesting in connection with organic foods: The organic-healthy (12%) and the adventurous (13%) food consumers. The values of these two segments are compatible with the organic mentality. In general, the primary motives for the consumers to buy organic foods are considerations for their own health, but also for the environment.

The best known and most applied labelling system on the market is the red Ø-label for organic foods, while the Nordic eco-label, the,Swan, is the most recognised label for a selection of other basic consumer goods (non-food). Danish IP labelling for fruit and vegetables is less well known.

Life cycle assessments of products are utilised in a number of companies in the Danish food processing industry. They are currently used for in-house purposes in the companies and not for marketing towards the Danish consumers.

Environmental impact per product
Assessing the environmental impact per product requires an assessment of the environmental impact of every part of the produce chain. For the examples of environmental impact per product presented in the report, six different categories are used to characterise the environmental impacts of food. These are: contribution to global warming (greenhouse effect), acidification of the environment ("acid rain"), nutrient salt impact (for instance increased algal growth in lakes and inner waters), photochemical ozone formation (smog), eco-toxicity (toxicity in the environment) and exploitation of nature (utilisation of land areas).

The examples shown are one kilo of wheat bread, one kilo of cheese and a composite product – a sandwich with ham and cheese.

The product-oriented environmental analysis can be used for identification of where in the product chain the major sources of environmental impact are to be found for each product.

For the wheat bread the processes that contribute considerably to the different categories of environmental impact vary significantly. To limit the contribution of bread to the greenhouse effect, it might be appropriate to investigate the possibilities of reducing the use of fertilizer in farming, and to reduce the energy consumption to produce fertilizer in the industry, as well as to investigate the possibilities of reducing heat and power consumption in industrial bakeries.

To limit the contribution of bread to acidification it might again be appropriate to focus on the fertilizer, and in particular to focus on the ammonia evaporation from cultivating the soil. To limit the contribution by bread to the nutrient salt impact, focus must be on the wheat growth processes, which leads to evaporation of ammonia, nitrate and phosphate to the surrounding environment. While for the contribution of bread to photochemical ozone formation, focus must be on energy consumption for transport and baking, as well as loss of volatile organic matters in connection with exploitation, refining and distribution of fossil fuels (oil, gas and coal).

The results for bread illustrate the dominating importance of the use of fertilizer and the nutrient household in agriculture, as such. This would only be even more obvious, if, instead, a livestock product had been chosen as an example, as the nitrogen outlet is to a higher degree connected to the livestock production.

In the report the environmental impact of the wheat bread is compared with environmental impacts of other products, and with the environmental impact of an average person's daily consumption.

In the report, cheese is used as an example to show productions that are subject to production restrictions. As for instance the milk production, where the production and thus the environmental impact cannot be changed by a change of the demand. As a consequence of the quota regulation, consumption of cheese has no influence on the total milk production in agriculture, thus the dairy cattle will not contribute to the calculation of the environmental impact of cheese.

This also indicates that other tools than a general change of the demand should be involved, if the environmental impact of dairy cattle farmers is to be changed. If the quota regulation of the milk production was abolished, a change inofdemand would again be able to affect the production quantities. And then the environmental impact of the dairy cattle should be included in the assessment for cheese as a product. This would entail a considerable change in the environmental impact per kilo of cheese.

In a total assessment of all environmental impacts from the agricultural sector, the environmental impact from dairy cattle farming should therefore be considered separately, for instance in a category of "Environmental impacts from processes with production limits".

The assessment of the environmental impact per product can also be used for comparison of products, or for assessing the environmental impacts from composite products. The report shows the result for the composite product "A sandwich with cheese and ham". All products are produced by conventional farming.

One kilo of cheese would impact the environment less than ham, and for all environmental impact categories except for photochemical ozone, also less than bread. By increasing the consumption of cheese and bread and reducing the consumption of ham, considerable environmental improvement can be obtained, considering the present regulation of the milk market. If the quota regulation of the milk production in Denmark was abolished, it would be the cheese rather than the ham that should be reduced to get the most environmentally friendly sandwich.

Similar analyses can be carried out for a broad range of other basic foods, based on the complete basis of data that was established within the framework of the project "Life cycle assessment of basic foods", See also

Environmental impact per kilo or per Danish krone
The total environmental load of the community will not necessarily decrease, even though we reduce the environmental impact per product kilo. Since the Danish consumers have a fixed amount of money available for consumption per year, the total environmental load of the community is determined by the average environmental impact per price and not per kilo.

With this interpretation of the results, the environmental difference between the three above-mentioned products will be reduced, but the general conclusion on the products' mutual environmental impact will remain unchanged.

When the environmental impact is assessed in relation to the price level, an increase in price of any product will result in a relative decrease in environmental impact. Thus, increasing the processing of the product can also reduce the environmental impact, provided that the processing does not entail a corresponding or additional increase of the environmental impact. In the report the environmental impacts of sandwiches produced in three different ways are presented, based on a series of assumptions about manufacturing and consumption of sandwiches. It appears that an increase iof the service given to the consumer may potentially lead to considerable reductions in the total environmental impact, since extensive services absorb consumer potential without simultaneously increasing the environmental impact considerably.

Footnoter

[7] Wiedema, B.P. et al. (2002): "Product-orientation of the environmental effort in the agricultural primary production. Assessment of means of action", work report no. 19, Agency of Environmental Protection, 2002.

[8] The government (2002): Joint Future – a development in balance. The Danish national strategy for sustainable growth, the Agency of Environmental Protection, June 2002.

[9] The government (2003): Green Market Economy – environment worth the money, April 2003.

[10] The commission of the European Union (2001):"Environment 2010: our future, our responsibility" – The sixth environmental action programme for the European Union 2001-2010. The Eu commision, Luxembourg, 2001.

[11] The commission of the European Union (2001): Green-book on an integrated product policy. Brussels, KOM (2001) 68 final, February 2001.

[12] The ministry of science, technology and development (2003): "Green technological foresight – about promising green technologies with professional perspectives", May 2003.