Building a more sustainable food system begins with changing the way we grow food
2019 Sustainability Report: Focus Areas
As one of the world’s leading food and beverage companies, a steady, sustainable supply of crops is central to our business. Sustainable agricultural practices are also critical to meeting the increasing demand for food as the global population grows.
The world’s global food system is under severe pressure. Agriculture accounts for approximately 70% of freshwater consumption worldwide and one quarter of greenhouse gas (GHG) emissions. Agriculture also contributes to approximately 75% of deforestation and if trends continue, could be the largest driver of biodiversity loss by 2050. Globally, the demand for agricultural products is expected to grow by as much as 50% over the next 30 years.
Fortunately, opportunities to change the way the world produces food are increasingly available. Agriculture offers many ways to address global challenges like climate change and inequality. More sustainable use of global agricultural lands could sequester 1.5 to 4.5 gigatons of carbon dioxide per year — the equivalent of taking up to half the world’s cars off the road for a year. And improving agricultural productivity has the potential to help lift food insecure nations out of extreme poverty. To provide food for a growing population while taking care of our farming communities and planet, we need to make agriculture more intelligent, inclusive, and sustainable.
PepsiCo sources more than 25 crops across 60 countries and supports over 100,000 jobs throughout our agricultural supply chain. We use this global scale to drive progress toward more sustainable agricultural standards and practices around the world.
Through our Sustainable Farming Program and partnerships with suppliers, PepsiCo is working with farmers to test and promote a range of sustainable, regenerative farming approaches, from new smart agriculture technologies, irrigation practices, and soil health management techniques, to measures that improve worker safety. Our goal is for PepsiCo to be a catalyst for change in the field, because we recognize that transforming how we grow food is an essential part of building a more sustainable food system.
Learn more about PepsiCo’s comprehensive approach to agriculture
"PepsiCo helped me switch to drip irrigation, which has completely changed the way I farm for the better. It has extended my harvest from 90 to 110 days, helped me save on electricity, fuel, and chemicals, and reduced the amount of water I use while increasing the amount of potatoes I grow."
Demonstration Farm in Thailand
In this interview, PepsiCo Vice President of Sustainability Christine Daugherty speaks with Demonstration Farmer Ketsarin Boonkerd on how PepsiCo is supporting smallholder farmers and helping them flourish.
Demonstration Farms: Sharing best practices
Through our growing network of Demonstration Farms, PepsiCo is working with farmers in diverse growing regions around the world to show that sustainable technologies and practices can be more efficient and profitable for growers.
What’s farmed—and how it’s farmed—depends on local geography, climate, and culture. We work with smallholders and large-scale farmers around the world to test locally relevant, sustainable approaches to water use and soil health, such as drip irrigation and drone imaging for pest management.
Sharing these practices and technologies is the key to widespread adoption, enabling positive impact at scale, so other nearby farmers are invited to the Demonstration Farms for “Field Days” to see the techniques, tools, and results first-hand. This peer-to-peer idea-sharing helps accelerate positive change with greater scale.
Together, we find what works best for their particular geography and crops, then help the farmers implement these approaches. The results can include more efficient water and fertilizer use, healthier soil, and increased crop yields and profitability.
Harvesting potatoes at a PepsiCo Demonstration Farm in Thailand.
Expanding our Demonstration Farm footprint around the world
Having begun in India in 2017 with just six farms, our growing global network now numbers more than 230 Demonstration Farms that span nearly 110,000 hectares across 9 countries. We measure the impact of our Demonstration Farms by looking at environmental and social criteria as well as core business metrics like farm performance and crop quality. In just one example, we found that select potato Demonstration Farms in India achieved an 8% increase in average yield and a 15% reduction in average GHG emissions over the 2018-2019 crop year.
We have more than 230 Demonstration Farms around the world, click on the examples in the map below to see the impact of some of our work.
At a PepsiCo farm in Petrolina, Brazil, where we source coconuts for KeroCoco coconut water, a smart irrigation system enables the distribution of the precise amount of water needed by each of the coconut trees. Weather stations tell growers when the trees need water, helping farmers make smarter decisions about when irrigation is needed. This technology has helped to reduce the cost of electricity by over U.S. $60 per hectare per year compared to 2015 and increase productivity by over 2,000 liters of coconut water per hectare.
The plantation makes use of every part of the coconut, including turning the husks into a natural fertilizing mulch that helps grow new trees with less need for artificial fertilizer.
São Paulo, Brazil
In São Paulo, Brazil, smart practices and technologies are being tested on a small plot of land on the farm. Preliminary results have proven a 30% increase in yield on this plot versus the rest of the farm based on these smart practices. This Brazilian Demonstration Farm uses drip irrigation and a sprinkler for potato fertigation, which infuses nutrients or fertilizer into the irrigation system, enabling precise nutrient management of the potato crop. With satellite imaging and high efficiency irrigation equipment, farmers can grow more while using less resources.
In 2019 and early 2020, we launched 9 palm oil Demonstration Farms in Mexico.
There are nearly 7,000 palm oil producers in Mexico. The vast majority, around 95%, of palm groves are smaller than 30 hectares, yet these account for about 85% of the country’s production.
PepsiCo has led a program to support smallholder growers and help to expand the Mexican palm oil industry in a sustainable way, assuring a positive impact on communities, where human rights and biodiversity are respected. Helping smallholders implement sustainable techniques to increase crop yield, like efficient nutrient management, is essential to meeting a growing domestic demand for palm oil and improving opportunities and livelihoods for small growers.
We currently have three Demonstration Farms in Argentina. At the El Parque Papas farm in Nicanor Otamendi, sustainability is the foundation of all their farming practices, from seeding and harvesting, to cleaning and transporting. See how we sustainably farm potatoes at this farm in Argentina to make Lay’s chips.
From the small pilot of just six farms, PepsiCo’s Demonstration Farm program in India has grown to 39 farms that are producing outstanding results. The 2018–2019 crop year saw an 8% increase in average net yield. For the farmers, that translated into an average income increase of U.S. $107 per acre. At the same time, per-ton GHG emissions were reduced by 15%.
In Vietnam, training and technical support on efficient irrigation and fertilization offers potential for increasing yield, quality, and profitability on the farm. This can have a huge impact on the quality of life of farmers and their families.
Tran Thi Anh Phuong operates a PepsiCo Demonstration Farm in Vietnam’s Central Highlands. She’s been working with PepsiCo for more than 10 years, and in that time has been able to expand her potato production operation, acquire more land, and increase yields.
By expanding her business, Mrs. Phuong was able to send her son and daughter to university. Her daughter is now an agriculture lecturer while her son works in the aerospace sector.
PepsiCo is making progress toward our goal of sustainably sourcing 100% of our potatoes, oats, whole corn, oranges, palm oil, and sugar cane by the end of 2020. At the end of 2019, nearly 80% of our potatoes, whole corn, oats, and oranges were sustainably sourced, along with 82% of our palm oil and 86% of our sugar cane.
As part of our Sustainable Farming Program (SFP), our supplier farms are independently verified as meeting select criteria from the program’s 114 social, environmental, and economic principles, which reflect best practices and promote positive outcomes for farmers, communities, and the environment. The SFP is a continuous improvement process and PepsiCo works with suppliers and farmers on an ongoing basis to deliver sustainable outcomes that address salient risks and opportunities in our supply chain.
Key indicators include compliance with PepsiCo’s Supplier Code of Conduct and commitment to zero deforestation, meeting international standards for employment and health and safety practices, optimization of nutrient and water use, and enhanced soil health and biodiversity.
The program also promotes Integrated Pest Management (IPM), which ensures responsible, safe, and legal agrochemical and pesticide use along with biological crop protection measures.
See how we’re working with farmers through our Sustainable Farming Program to sustainably source the potatoes used to make Frito-Lay products sold in the U.S. & Canada.
PepsiCo's global supply chains for certified palm oil and sugar cane are complex and involve hundreds of thousands of smallholders. We’ve partnered with our suppliers to implement a range of programs aimed at supporting smallholder producers. By increasing yield on smallholder farms in our value chain, we're not only improving farmer livelihoods, we’re also increasing our ability to source sustainable commodities.
Supporting the First Mill in Mexico to Meet RSPO Certification
In 2017, PepsiCo partnered with our local suppliers, smallholder farmers, and industry to create a holistic program for the development of a sustainable palm oil sector in Mexico. Prior to 2020, Mexico had no domestically available supply of Roundtable on Sustainable Palm Oil (RSPO) certified palm oil.
This program supports the use of RSPO Standards in local mills and the inclusion of smallholders. In March 2020, Oleopalma’s Jalapa Mill became the first mill to achieve certification by the globally recognized RSPO Standard. It’s an important milestone on the road to meeting our commitment to sourcing 100% RSPO-certified sustainable palm oil by the end of 2020 and demonstrates to the Mexican industry that it can be done.
PepsiCo believes that working collaboratively with all stakeholders in Mexico to help build capabilities is critical to ensuring sustainable production of palm oil. This kind of multi-stakeholder approach with mills, smallholder farmers, and peer companies can help to create sustainable livelihoods while protecting vital ecosystems. We hope that our programs in Mexico will be a catalyst for broader industry change.
Learn more on our Palm Oil ESG Topics A-Z page.
Training session on agricultural best practices for palm oil producers in Tenosique, Mexico – hosted by PepsiCo, Oleopalma, RSPO, Nestle, and Proforest.
Meeting the Global Standard for Sustainable Sugar Cane
In 2019, with PepsiCo’s support, Group Azucarero Mexico (GAM) achieved Bonsucro certification. Bonsucro is a global nonprofit organization whose certification is the standard for sustainable farming and milling of sugar cane.
In partnership with GAM, implementation partners, and technical experts like Proforest and Peterson, PepsiCo co-created an engagement plan with Mexican smallholders in Tala Mill’s supply area to pilot Bonsucro’s Smallholder Standard.
The program includes building capacity for Tala’s smallholder farmers and sharing best practices with the wider sector. In 2019, PepsiCo and GAM partnered with the University of Guadalajara to host an Agricultural Summit with over 200 participants, bringing together technical experts from across Latin America to share approaches to more effective production and farmer health and safety.
After participating in the Summit, Jaime Gareca Rossell, Chief Administrative Division, Ingenio Azucarero Guabirá S.A., Bolivia, visited smallholder farms to demonstrate the best practices he learned while transforming operations on his farm to meet the Bonsucro Smallholder Standard.
"Economic development must be achieved without neglecting the social and environmental aspects that guarantee sustainable growth over time. I congratulate PepsiCo, Bonsucro, the Tala Mill and others for bringing together a range of smallholders."
Jaime Gareca Rossell
Chief Administrative Division
Ingenio Azucarero Guabirá S.A., Bolivia
One of the ways we’re working to combat climate change and build a more resilient supply chain is through regenerative agriculture practices.
Making positive changes at the farm level, such as growing cover crops, improves the soil health of the farm, enables efficient use of water and fertilizer, lessens soil erosion and nutrient run off, improves biodiversity and, importantly, captures carbon.
Reducing GHG EMISSIONS with Cover Crops in the U.S.
PepsiCo is testing regenerative agricultural practices such as cover crops across the Midwest United States, including with Iowa corn growers who support iconic brands like Tostitos and Fritos. We’re providing cost-share assistance for cover crop seeds to promote adoption in the short term, along with free technical assistance for farmers.
To make the long-term business case for sustainable practices, PepsiCo and farmers are sharing program results to demonstrate the impact on soil health and profitability.
In 2019, nearly 100 Iowa corn farms used cover crops and other regenerative practices such as efficient nutrient management and reduced tillage to achieve a 33% reduction in GHG emissions. PepsiCo provided agronomic support and cost sharing on over 12,500 acres to jump-start the implementation, and the total planted cover crop acreage exceeded 36,000 acres.
Two-thirds of the farmers reported expanding cover crop acreage as a result of the program, and interest is growing among farmers in including cover crops in their long-term farming strategy.
After harvesting corn, a rye cover crop protects the soil from the Iowa winter before Boone-area farmer Jeremy Gustafson plants his cash crop – soybeans – into the rye. 67% of farmers participating in PepsiCo's Iowa cover crop cost-share program reported expanding their use of cover crops due to the program.
Our Sustainable Farming Program is helping to drive innovation and the adoption of new skills and technologies by farmers and growers, increasing yield and profitability, and leading to more efficient use of water and fertilizer.
One way we’re working to increase efficiency and precision in farming is through mobile and web-based crop monitoring technology. This can enable growers to identify, understand, and manage crop performance factors and share these learnings with other farmers.
In Europe, PepsiCo continues to build on the monitoring technology it co-developed with Cambridge University, empowering farmers to use the latest mobile and web-based capabilities to monitor over 48,000 hectares of potato production. In 14 markets across Europe, we capture in-field data to help our farmers better understand how to increase yield and crop quality, while optimizing the inputs needed, such as water and fertilizer, which can help to reduce resource use and GHG emissions.
Through data-led approaches, we can develop more efficient farming practices to build stronger crop resilience. We have used our crop monitoring system to track our potato varieties and seed supply over the past number of years.? The benefits from this program became evident during the heavy rainfall in Europe in the last harvesting season and we were able to work more closely with local farmers to extend the harvest season and avoid crop loss.
PepsiCo’s leadership in promoting women’s empowerment in agriculture is also an opportunity to progress toward a more sustainable food system. Engaging and empowering women in our agricultural supply chain can improve livelihoods and resilience in farming communities, enhance supplier performance, and increase adoption of sustainable practices.
Women’s contributions to global agriculture are often overlooked. Women make up 43% of the global agricultural labor force and are also responsible for the vast majority—nearly 90%—of household food preparation.
According to The Food and Agriculture Organization (FAO), if women farmers had the same time and access to resources as their male counterparts, their food production would increase by up to 30% and help eliminate hunger for 150 million people.
Empowering Female Farmers with USAID
Since 2019, PepsiCo has partnered with the United States Agency for International Development (USAID) under the White House-led Women's Global Development and Prosperity (W-GDP) Initiative, to advance sustainable agriculture goals, including women’s economic empowerment. One shared focus of W-GDP and PepsiCo is to promote women's entrepreneurship and access to capital, markets, and membership networks in the developing world.
With support from the W-GDP Fund at USAID, PepsiCo and The PepsiCo Foundation committed U.S. $3 million of in-kind and cash contributions to this project and another U.S. $5 million to support further agriculture development in India. Together, we are working to scale successful approaches to women’s economic empowerment for our global supply chains, while helping to ensure demand for local crops.
Overcoming Barriers to Women’s Self-Sufficiency
Women farmers in West Bengal, India, part of the PepsiCo potato supply chain, face substantial obstacles to economic self-sufficiency. Barriers include lack of land rights, limited access to information, technology, and financing, and expectations of domestic work based on prevailing gender norms. Engaging local partners, like Landesa and TetraTech, helps us better understand these challenges and target aid resources. Over the 3-year life of PepsiCo-supported training programs, we expect to reach 160,000 women directly and an additional 150,000 women through community engagement and outreach.
Our community initiatives include supporting women to lease land, training women’s self-help groups, and engaging male champions who are working to design local approaches to more equitable and sustainable agriculture. PepsiCo-supported training programs cover a broad range of topics from good record keeping and pest control, to irrigation and crop rotation techniques, as well as opportunities to help them become lead farmers on their own.
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