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Business.2010 newsletter: Agribusiness

Volume 3, Issue 2 - February 2008: Agribusiness

Can multinationals in the agribusiness sector save biodiversity?

Globalization is a reality — we see this very clearly with our food which comes from overseas countries and travels sometimes half of the globe to reach our plates. From the sourcing of ingredients to final product delivery, through advanced manufacturing with modern food technology, multinationals in the agribusiness sector are key players in this global supply chain. However, few of us pay attention to the sourcing of the ingredients we eat. We rarely consider the environmental impacts, in particular on biodiversity, of our food. Unfortunately, this is also a reality which we need to recognize.

Knowing, saying and doing
Nobody can survive without food. Everybody knows about it; talks about it; and acts upon it. Most of us know about the state of biodiversity nowadays; some of us talk about it; but how many of us are actually doing something everyday to conserve biodiversity? This is a very important issue with an extremely low visibility in the short-term. When we notice something strange, it is often too late. Biodiversity conservation requires proactive and continuous action. All of us already knows this but, just like quitting smoking or drinking, it has been proven to be difficult.

The nature of the corporation
In the modern capitalistic world, competition is considered as natural. Any corporation — from large multinationals such as McDonald’s to traditional ‘Mom’s fresh orange juice shop’ near the highway parking lot — needs to confront competition. Basic management theory tells us that the best competitive strategy is either differentiation or low cost. This was mentioned already three decades ago; many corporations today are pursuing one of these strategies.

Monsanto’s RoundUp Ready soybean is a well known example of differentiation. As globalization proceeds and the volume of business expands, many companies pursue more and more effective ways of doing business. Effectiveness means profit. Rather than handling diversified products, companies try to standardize them. The environmental impacts of large agribusiness are increasing tremendously. However, few people see these impacts or the fundamental relationship between agribusiness and biodiversity. The general public may, somehow, feel it; may gradually talk about it; but still too few individual consumers are actually doing something about it in their daily activities. This is why, I believe, multinational agribusiness companies can and should be more active in addressing biodiversity loss.

Balancing philosophy and reality
I do not think that anyone has a strong opinion against biodiversity... Most of us know its importance, but few of us want to sacrifice our current standard of living, which is extremely convenient and, in many ways, ensures that we feel remote from biodiversity. In short, maybe we do not want to pay ourselves, but want to be ‘smart’, which means being an environmentally or biodiversity conscious person. What did our ancestors do when everybody recognized that something was important but was tough to do on an individual level? One of our greatest inventions in history was the creation of the corporation.

Christopher Columbus, and many other ambitious people, achieved great accomplishments through risk-sharing or role-sharing schemes supported by the monarchs. This is what we may now call ‘public-private partnerships’. This type of collective or organizational schemes appealed to people both emotionally and practically because although many people understood the importance of the issue at hand, they did not want to do and could not change things individually. Unless recognizing and talking, however, corporation’s essential nature will naturally lead them the most effective and productive way to make profit. However, once corporation really recognize the importance of biodiversity, and talk inside and outside the organization about it, large agribusiness corporations will become potentially effective solution providers to the biodiversity challenge.

McDonald’s recent leadership to protect the rain forest in the Amazon, in partnership with Greenpeace, seems to me like a good example of this. It changed the behavior of the industry. It switched from philosophy to reality in just six months, from Greenpeace’s call for an industry-wide moratorium of soybean sourced from the rain forest. Because we live in the real world, proposed approaches need to produce real solutions which are viable within our current economic and compatible with the way businesses are organized.

Large agribusiness corporations have enough potential to maintain biodiversity. They just need to do it.

Seiji Mitsuishi is Professor of Business Administration, Miyagi University, Japan.