Without farms, there is no food. But finding a sustainable way to feed a world populated with nearly eight billion people is one of the most vexing challenges of our lifetimes. Dairy farmers and cattle ranchers, in particular, feel the heat of climate change since meat and dairy production exacts a hefty environmental toll on the planet.
Even as demands to act on climate change grow — UN Secretary-General António Guterres called 2021 a “make-or-break moment” — global meat and dairy production shows no sign of slowing down. Instead, they’re both increasing. The world produces nearly 800 million tons of milk annually — more than twice the amount compared to 50 years ago. Meat production has tripled during the same 50-year timeframe to more than 340 million tons.
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Brazil alone accounted for 214.7 million head of bovines at the end of 2019. In 2020, the U.S. had 94.4 million head of cattle, and the overall global cattle population hit close to one billion head. That’s one giant load of fertilizer and a whole lot of greenhouse gas.
In fact, data released last year found the meat and dairy industries create 7.1 gigatons of greenhouse gases annually — that represents 14.5% of total man-made emissions.
But, what if farmers could raise dairy cows and beef cattle in a way that is not only sustainable, but that also removes more carbon from the environment than the massive livestock industry emits globally — and get paid for providing an incredibly important environmental service?
LABS‘ U.S. correspondent Lauren Simonds spoke with BovControl CEO and co-founder Danilo Leao to learn more about the company, co-headquartered in Brazil and California, that’s helping to tackle the urgent climate-change challenge while providing a new source of revenue for its farmers.
Lauren Simonds – What is BovControl and how does it help dairy and cattle ranchers manage their livestock?
Danilo Leao – BovControl provides farmers with easy-to-use tools to collect animal data in the field using hardware that communicates with smartphones or computers, despite poor internet connectivity. That data includes everything from the weight of the animal, where it comes from, genetic information, the feed, and all daily activities associated with animal management.
Farmers can use whatever tracking methods they have. We integrate with all kinds of weight scales, barcode readers, RFID readers, ear tags, Bluetooth collars, and different types of implanted chips. Nowadays, that’s called the Internet of Things (IoT), but we nicknamed it IoC: the “Internet of Cows.”
We collect data about the land, grass, productivity per hectare (about 2.5 acres of land) and grazing patterns. For example, if farmers graze animals in several areas of the farm, we help them monitor that to increase the grass productivity per hectare.
BovControl’s second phase began when corporations realized that we have a valuable database that grows exponentially. Currently, our database doubles in size every quarter. Our datasets help companies understand their product sources, quality aspects, prices, volume, and supply predictability.
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LS – You’ve created the largest livestock database in the world. Are there other databases like BovControl that track various types of data for farmers?
DL – We have 80,000 farmers in more than 50 countries across six continents who actively use our BovControl platform. Governments — the largest being the U.S. and Brazil — are closest to us in their traceability systems, but they have less than 10% of our data volume.
Associations, like the Brazilian Association of Zebu Breeders (ABCZ) and the American Angus Association in the U.S., are not really competitors, but they have important sets of relevant data. ABCZ has close to 20,000 active farmers, and the Angus Association has 18,000 farmers, but they’re not active every year.
LS – What are some of the top insights customers can glean using this massive database?
DL – Let’s look at farmers and food companies that use milk as a raw material as one example. These customers deal with complex value chains, and our BovDairy tool provides quality traceability, ways to monitor production, price changes, and it adds a layer of predictive analysis about market behavior.
Nestle, for example, has almost 2,000 farmers supplying milk for them every day. The company needs to monitor logistics like the volume of milk they take from each small producer in different regions.
They collect milk samples to make quality tests — like the fat per volume and bacteria count — in the field. Our tools give them the visibility to track all quality aspects of the milk.
LS – Nestle manages its entire milk supply chain with Leitera, a tool you developed. How does Leitera work and do other milk producers use it today?
DL – Leitera is a white label of our BovDairy tool. We created a customized version for Nestle that sits on top of our platform, but we have many suppliers and processors that use BovDairy. The application helps our customers understand the daily volume of milk they collect.
Milk volume fluctuates in any given local market and that affects the price. Processors need to price properly to keep buying milk from their suppliers. BovDairy’s predictive analysis reduces their exposure to fluctuations in market-price volatility — in the actual moment and in the future — because our data provides more precise forecasts than any other company.
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LS – How does BovControl help ranchers make better decisions?
DL – A family taking care of their animals is not prepared to deal with complex datasets. Our easy-to-use tools let them collect data in the field and compare prices of other local, national, or even global suppliers.
Our platform lets farmers interact with the processors to understand what quality aspects their clients need. Farmers can negotiate a better price for delivering a specific quality. In essence, BovControl de-commoditizes commodities.
Let’s say you use grass-fed cows to produce milk and your neighbor deals with feedlots. That one factor alone produces a difference in quality, and buyers need to understand the specific quality you provide, especially if it’s used for a certain product. Your milk quality may, or may not, be better for a specific type of cheese, yogurt, or chocolate.
Farmers can also use our calculator to decide whether it’s worth investing in a specific management protocol. The system crunches the numbers to calculate how much more per gallon they stand to gain.
De-commoditizing the value chain is a new way of doing this business. It’s fair for the farmers who deliver unique quality, and it’s fair for the processors who pay a bit more for a better product.
LS – Why do ranchers, supply-chain handlers, and retail customers supplying beef to consumers care about tracking beef from its origin to where it’s sold?
DL – Traceability is an important, but very stressful, subject because many government-led initiatives are very frustrating for farmers. Traceability is bad for farmers when governments push their methods without understanding the reality on the farm.
Dealing with traceability — collecting data, tagging animals, and otherwise interacting with animals in large volume — is not easy. A big farm can be the size of a city. The government protocols were created by people who are not very familiar with that world.
Breeder associations with specific demands sat in governmental space discussing protocols with packers and retailers, and each group created barriers to push the protocols to serve their own interests.
When you deal with food, you need systems that are scalable, and you need a significant volume of users inside the same system. These ‘protocols-by-committee’ are not scalable, and the farmer became the villain of traceability.
In a voluntary-traceability system, I can guarantee the quality of the evidence BovControl provides. The tools our farmers use to collect data in the field deliver a much higher quality of traceability, without the pressures of protocols that can’t scale.
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LS – How can BovControl’s livestock database increase sustainability and reduce climate change?
DL – We started working on climate change and sustainability three years ago. The United Nations Food and Agriculture Organization (FAO) hired us to help them build a digital calculator that would let livestock ranchers understand how cow emissions affect their carbon footprint.
We worked with Embrapa, a governmental institution that revolutionized agri-business in Brazil, on another project and learned about carbon sequestration: the scientific term for carbon removal from the environment.
We joined forces with Embrapa to measure carbon, and we’ve been working with them, and Nestle, to measure the livestock system as a whole. Not just the farm’s cows, but its grass, water, trees, and forest. We crunched the numbers and here’s what we found.
The average BovControl farm has 150 cows, 200 hectares, and one truck. Every year, this average farm puts 115 tons of carbon into the environment and every year it removes 500 tons. This farm is not only net positive, but it also produces a 75% sequestration surplus. Grasses and forests are carbon sinks.
Consider this: Livestock ranchers, especially in Latin America, have local laws that require a certain percentage of their farm to contain forests. The percentages vary by region. In the Amazon region, you can work with livestock on only 20% of your farm. The other 80% of your farm must be forest. The minimum in Brazil is 15% forest.
A farm’s forests, bushes, grass, and trees pull carbon out of the environment. And, depending on the species of vegetation, the sequestration of carbon is different. We use Embrapa’s data sets to calculate cow emissions and carbon sequestration from these different vegetation species. We monitor the species on our farms and collect data using seven different satellite sources.
LS – Is proof of sustainable milk and meat something your customers and end-consumers value?
DL – Yes, and this relates to your previous question on sustainability and climate change. We can now provide evidence that our farmers remove more carbon than they emit, and we’re creating tokens of carbon removal that allow farmers to get paid for the environmental service they provide to the world.
We are placing that data, the type and volume of sequestration, in a blockchain so the world can see and verify it. Companies like Google, Amazon, Apple — and others committed to be carbon-neutral by 2030, 2040 and 2050 — can buy these tokens as carbon credits to offset their carbon emissions. It’s a huge market. A recent Financial Times article noted the investment industry has $43 trillion in funds committed to net zero.
Our farmers get a token for every ton of carbon they remove, which gives them an additional revenue stream. The price for removing a ton of carbon varies by market. Right now, I think it ranges between USD $19 to $25 per ton.
LS – How has the pandemic affected your business?
DL – It seems crass to talk about our success at a time when so many people were ill or lost loved ones. But we grew 60% in 2020 — mainly because commodity prices increased drastically. It gave customers an extra push to have data and predictive analysis on market behavior. The crisis accelerated the need for tools that could predict and help reduce the impact of price volatility.
LS – You started BovControl in Brazil, and you now have offices in Silicon Valley and Fresno, California. How has demand grown and what percentage of your customers comes from the U.S.?
DL – Currently, Latin America represents 40% of our customer base, while 15% of our clients are in the U.S. But with the contracts that we have in our U.S. pipeline, that will change quickly. By the end of 2021, we’ll hit 25%.
LS – Can you share any major milestones or new offerings in the works?
DL – Two weeks ago, we signed a very important contract with one of the major big-tech companies. We can’t say which one yet, because it’s still confidential.
What we can say is that it’s a fund, and that we’ll announce this new partnership in November at COP26, the United Nations Climate Change Conference in Glasgow. This partner is validating the carbon-removal mechanism we discussed earlier.
It’s important to understand the difference between carbon mitigation and carbon removal. Tesla, an icon of sustainability, mitigates, e.g., reduces nearly 400,000 tons of carbon per year compared to cars using fossil fuels.
BovControl farmers don’t reduce carbon — instead, they remove it from the environment. In 2020 alone, they removed 25 million tons of carbon. That’s 70 times Tesla’s mitigation. The partner we’ll announce in November recognizes our platform as the largest framework of carbon removal in the world.
We’re very confident this partnership will accelerate adoption and growth because it gives our clients an extra source of revenue. Farmers and cows are no longer climate-change villains. They’re becoming the real stewards of the environment.