America's biggest food production companies face a growing threat of water scarcity, according to a new report from Ceres, an environmental sustainability group.
Producing food, after all, requires more water than almost any other business on Earth. And the outlook isn't pretty: One-third of food is grown in areas of high or extremely high water stress, while pollution and climate change are further limiting supplies of clean water around the world.
And yet two-thirds of the 37 U.S. food companies assessed in the report aren't even engaging farmers on this issue, says Brooke Barton, co-author of the report and leader of Ceres' water program.
Farming can be a major contributor to water pollution through runoff from chemicals and manure. Because food companies depend on clean water, they have an incentive to help farmers keep water in mind.
"A lot of the food companies are frankly asleep at the wheel," Barton says. "Many have not even begun to look at the water impacts associated with the farmers, the dairies, and the ranches that they source from."
Which may be surprising, since water is already having a significant financial impact on many of these food companies. Among the examples cited by the report: Cargill reported a 12 percent drop in 2014 fourth-quarter profits linked to the drought's impact on beef production and Coca-Cola decided in April 2015 not to build an $81 million bottling plant in southern India because local farmers said it might exhaust groundwater supplies.
Some companies are working with producers to improve water efficiency and limit pollution, Ceres notes. Unilever, the producer of Hellmann's mayonnaise, is paying their Iowa soybean farmers ten cents a bushel to adopt sustainable water practices, Barton says.
As water supplies risk becoming increasingly depleted and polluted in major agricultural growing regions, traditional risk management approaches — like geographic diversification — are less effective.
"There's not a lot of growing area left and we are pushing up against the limits of available water supply," Barton says. "So, this is a time to invest in the supply chain. To invest in watersheds and in agriculture. Not a time to run and hide."
The report cites drought, aquifer depletion, and competition from cities as additional reasons for water worries.