(Bloomberg) —
PepsiCo Inc. struck an agreement with fertilizer giant Yara International ASA to secure lower-emission crop nutrients for farmers it buys from in Europe, as food and beverage companies push to become greener.
Yara will initially mostly supply PepsiCo farmers with traditional products made using natural gas, but plans to boost volumes of fertilizer manufactured with either renewable ammonia or ammonia produced via carbon capture and storage by 2030. PepsiCo — which sells snacks including Lay’s potato chips — said efforts will focus on potatoes to begin with, before expanding to other crops.
It’s the latest sign that food producers are paying more attention to the impact of fertilizer usage in their supply chain. Multinationals are coming under pressure to reduce their environmental footprint — and for foods like wheat and potatoes, a big chunk of emissions can come from nutrients used to grow them.
Gas is used as a feedstock and source of energy to make nitrogen fertilizer. So-called green ammonia is energy intensive, produced by combining hydrogen from water electrolysis using renewable energy with nitrogen. While companies including Yara are starting to manufacture green ammonia, so far not enough has been made to sell commercially at scale.
PepsiCo will buy as much as 165,000 tons of fertilizers per year from Yara by 2030, according to a statement on Tuesday. Those volumes will eventually come from Yara’s new renewable hydrogen plant in Norway, and some from a Dutch plant which will use carbon capture and storage.
“Fertilizers represent one of the biggest opportunities for PepsiCo to reduce emissions, as they significantly impact the company’s average potato carbon footprint in Europe,” according to the statement.
Yara recently agreed similar collaborations with companies including Simpsons Malt, potato chip manufacturer El Parque Papas and agricultural cooperative Lantmannen.
“This is quite different from what we have been doing so far,” Mónica Andrés Enríquez, Yara’s executive vice president Europe, said by phone. “It’s not about a simple contract of fertilizers, but it includes also a holistic approach on how the farmer is going to apply the fertilizers, and the use of precision farming tools as well.”
Separately, fertilizer company CF Industries could produce 20,000 tons a year of green ammonia at a plant in Donaldsonville starting in 2024, according to Bloomberg Intelligence.
(Updates with comment from Yara executive in eighth paragraph)
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