Note: This article is adapted from our previously published Sustainability Report. Content has been edited and reformatted for a blog audience, with minor updates for clarity and readability where appropriate. Customer-provided photos, used with permission.
PepsiCo® sources around 50 crops and ingredients from more than 60 countries to manufacture its large portfolio of convenient foods and drinks. Midwest and Northern Plains farmers produce some of the sugar beet-based sweeteners for Gatorade, wheat for Stacy’s Pita Chips, corn that goes into Doritos, and dairy for the cheese in Cheetos. Products may be baked or fried with a bit of soy oil.
Its family of brands are consumed more than 1 billion times a day in more than 200 countries, and customers increasingly care about the production practices behind those products. PepsiCo aims to help producers adopt or expand regenerative, restorative, or protective practices across 10 million acres by 2030.
When Farm Credit presented its plan for a pilot Stewardship Fund, PepsiCo provided invaluable insights and experience. Together, we are testing the fund’s ability to streamline multiple funding sources to make it easier for producers to access capital for stewardship activities.
Margaret Henry, vice president of sustainable and regenerative agriculture for PepsiCo, discusses how a more resilient agricultural industry supports the company’s future, and the importance of collaborating with Farm Credit to reduce financial barriers to stewardship activities.
Q: Why is sustainability in agriculture important to PepsiCo?
A: PepsiCo is one of the leading food companies in the world. A lot of our interest in sustainability started from potatoes, because Lay’s is one of our biggest brands. For Lay’s, we have direct contract relationships with some farmers in different regions of the world to grow our proprietary varieties.
We have extended that thinking about farmers into our other brands. For example, we now have direct relationships with growers in Nebraska and Illinois to grow corn for our Doritos.
Most companies our size don’t have much farmer touch, and we need more companies to talk to farmers and care about their realities in more than an actuarial kind of way.
Many companies say, “Oh, if the U.S. doesn’t produce enough, I’ll go to Argentina and Brazil to buy what I need.” That may not be realistic or viable in today’s world.
Q: How do farmers respond to working directly with PepsiCo?
A: I’ve found farmers actually love a connection to the product because they don’t always know where their products go.
Our approach, when working with farmers, is: “We can’t produce these without you, and so we’re here to listen to your challenges. We’re here to look for mutual solutions.”
Many are surprised by that perspective, and many are excited to have some sort of connection to the end product.
Q: How should the financial risk of stewardship be shared?
A: Everyone in the system should be risk-sharing. It shouldn’t be on the farmer.
It should be shared with co-ops, traders, consumer packaged goods companies (CPGs), retailers, the financial world. It should also include the NGO (non-governmental entities) world and the government. We all need to work together to share the risk. Anybody who likes to eat should be part of it.
Q: How does PepsiCo advance stewardship?
A: Farmers know their farms best, and we’re here to support them.
We started with early adopters. Our theory was those early adopters might need a little something to go further. What we’ve seen is that they’ve become leaders, and their neighbors get excited when they see success.
When we first started this work in Illinois, one farmer was interested, and he had been doing cover crops for a while. So, we helped him do some more of them on a different farm.
Then, there was a drought, and everybody watched his corn stay green longer than everybody else’s. The next year, there was a whole lot of interest. We didn’t push it. We were there showing the success and waiting for others to come along.
Q: What are the big challenges to advancing sustainability?
A: Consumer engagement around sustainability is an ongoing challenge. Regenerative is starting to be one of those buzzwords. PepsiCo sees benefits to regenerative ag beyond the buzz. We’re trying to secure the future of our company.
Data is a big challenge. You could spend all your money and all your time trying to make the data case. Perfect data versus action is always going to be a continuous challenge. Farmers don’t change how they run their businesses based on a calculator with some data that spits out a semi-incoherent spider graph.
Another challenge is understanding the physical and social challenges that are coming for farming communities.
At what tipping point do rural communities no longer have a hospital or a school? That’s harder to put on a map, but it’s really important.
Q: Why is PepsiCo interested in collaborating with Farm Credit and its Stewardship Fund?
A: We started to think strategically about who we would want to work with in the financial sector, and Farm Credit was at the top of that list. Their reach and relationships with farmers are extremely impactful.
We’re really excited about making the regenerative transition more financially accessible. Some practices have a longer payback period, and not all farmers can afford that. I’m hoping the Stewardship Fund helps support incremental improvements and long-term resilience for farmers.
By working together, we can start to demonstrate benefits for the rest of the industry. I’m hoping this moves out of the niche and into the mainstream.
