Fifty years ago, the Economist Nobel Laureate Milton Friedman wrote an article in the New York Times Magazine in which he stated that organizations cannot have “social responsibility”; only individuals can. The role of a private corporation is to maximize shareholder value while acting ethically and within legal constraints.
Today, business leaders increasingly have a larger viewpoint of their responsibilities, referring to “stakeholders”, which includes customers, suppliers, employees and communities in which they operate. On occasion, the sometimes disparate goals overlap, and a company can do good while also serving shareholder interests. The use of Agolin as a natural feed additive represents one such example.
Livestock represent a significant contributor to greenhouse gases, at 14.5% of global emissions (2/3 from cattle). With the U.S. representing the world’s largest beef consumer, American cattle herds’ burping and flatulence represent a big share of pollution.
Agolin is a natural feed additive that inhibits animal gas and may increase production. Already demonstrated with growing use in Europe, American farmers are just starting to experiment with the new feed as new competitors enter a market poised to reach $1 – 2+ billion by 2030 (or faster by other estimates).
Commitments to food additives that lower gas emissions (primarily a reduction of burping) from cattle by Burger King, Nestle, and increasingly by investors, should accelerate this trend. Especially if test results are able to prove increased milk output in addition to lower emissions.
- The Environmental Impact of Livestock (Feb 6, 2018, RUVIVAL)
- The Hidden Costs of Hamburgers (Aug 1, 2012, Reveal)
This post is based on the Reuters article, BURPS TO BURGERS: Food Companies Wrangle Climate-warming Cattle Emissions, by Rod Nickel, September 18, 2020, and the YouTube videos in the Spotlight. Image source: Shutterstock / MarclSchauer
1. What would Milton Friedman think about the use of gas reducing feed additives for cattle herds when no environmental standards exist (nor would be enforceable) for cattle “emissions”?
Guidance: He would expect a “cost-benefit” analysis: how do the costs compare? If the new feed does prove to increase milk output, then an efficiency is achieved that aligns with his focus on the profit motive. Any commitment to lower greenhouse gases is an ethical and increasingly legal requirement that fits the Friedman justification. (Author’s note: Milton Friedman died in 2006, so these comments can only be speculative.)
2. In what way does Agolin and its competitors represent a possible operational efficiency?
Guidance: Less burping may be associated with greater milk production. (There is no mention of any effect on accelerating weight gain in the beef herd.) If the cost of this new feed input is comparable to current additives, then any increase in output represents improved productivity.
3. Are there any other benefits from the new feed additives to corporate “stakeholders”?
Guidance: Yes. Increasingly pollution reduction is becoming an ethical necessity regardless of regulation. Focusing on environmental attributes represents a niche competitive dimension (admittedly a secondary one in most texts). As dairy consumers increasingly commit to a carbon neutral future, Agolin may prove helpful.