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AA Co’s ambitious framework for sustainability action can benefit broader industry

Jon Condon, 19/11/2021

AUSTRALIAN Agricultural Co has made five industry-shaping climate and sustainability commitments, as part of its innovative sustainability framework released today  and the broader industry stands to benefit richly from some of the actions.

Managing director Hugh Killen said the framework, a first of its kind for the beef industry, was a blueprint for action.

“As an almost 200-year-old company and the largest beef producer in Australia, we feel a responsibility in this area,” Mr Killen told an audience of senior industry stakeholders attending the program’s launch in Brisbane this morning.

“We work across the beef supply chain and the Australian landscape in a way that few others do. That’s why a framework of this nature, along with these commitments is significant.”

In setting the scene for the discussions to follow, Mr Killen asked how the industry would ‘own’ its own conversation over sustainability, when agriculture was currently “absolutely right in the crosshairs.”

“It’s something we really need to think about, as an industry. If we can work out how to effectively and efficiently share industry insight and experience, to all come together, we’ll end up ‘moving the needle’ in this debate really, really quickly – not just in terms of methane emissions, but moving the whole industry to a nature-positive sustainability standpoint.”

He said the desires of Australia’s beef customers were being felt and expressed stronger than they have ever been, through scrutiny of provenance, traceability, sustainability, and animal health and welfare.

“Understanding the whole life-cycle is actually key to every conversation we have in the market, all around the world,” he said. “They’re demanding change.”

Mr Killen said a question about sustainability that often got lost in the noise was how we feed ten billion people on the planet, three times every day – and how to do that sustainably.

“Ultimately, when we think about sustainability, that’s the core goal we should be thinking about,” he said.

“Obviously, increasing regulation is coming – it’s going to restrict access to some global markets, for sure. Future access to capital is uncertain, and I think the businesses that don’t actually have a sustainability journey will be exposed. But the flipside of that means that businesses that can show and demonstrate progress against sustainability goals will get plentiful access to capital – and probably at a reduced rate. So there is a financial imperative in there as well.”

“The question we will be asking within AA Co, and hopefully across the wider industry, is are we doing enough to move the needle?”

AA Co MD Hugh Killen at this morning’s sustainability framework launch

In outlining AA Co’s new sustainability framework, Mr Killen divided the project into three pillars that would guide the company’s sustainability decisions: re-imaging agriculture (shaping agriculture to meet the needs of a changing world); valuing nature (protecting the foundation of nature for a better tomorrow); and thriving communities (creating connection and opportunities for communities to thrive).

Illustrating the company’s approach to the first of these framework pillars – re-imaging agriculture – Mr Killen used the example of the company’s recent approach to water access.

“AA Co owns pretty significant water rights in the gulf of Carpentaria – close to 100,000 megalitres – so it’s a significant asset. We’re in the process of thinking how we use this water, and we are into that now from a trial perspective.”

Last year, a 2000ha area was used for a trial, stepping up to another 6000ha of farming this year.

“In re-imagining agriculture, we are asking, what is the new approach we need to be putting in place to open up that irrigation? And in thinking about the future of food, what are we going to grow – a cash crop like cotton, or bulk commodities like chickpeas. It helps us start to think about what we are going to do around that farming venture.”

“At the same time we’re also thinking about climate action in doing that, and how we design those farms so they are carbon-positive from the get-go, and have the right sustainability features in them. We are holding ourselves to account as we step into it, using the framework as the guide.”

Five key commitments

As part of the sustainability process launched today, AA Co has made five key commitments.

“Each of those individually is really important, but put them together and we think it shows a significant pathway towards AA Co becoming a nature-positive business,” Mr Killen said.

The company plans to report annually against it commitments as the program unfolds.

Australia first methane trial

Perhaps not surprisingly, the first of AA Co’s five sustainability commitments is around methane emissions.

Mr Killen said ultimately the science behind emerging methane abatement technologies (like asparagopsis and Bovaer) was completely sound – however there were still very significant challenges in turning this into an operational reality that could be applied ‘at scale.’

“For that reason, we are not committing to a methane target today – however we are fully committed to working with our partners to fast-track the operational application of these technologies,” he said.

As part of these commitments, Mr Killen announced that AA Co would be working with asparagopsis producer SeaForest in an industry-first trial, co-funded by MLA, which will measure the methane-busting benefits of using the feed additive in long-fed Wagyu feedlot cattle.

The project, starting with 80 AA Co feeder cattle, would be the critical first step in turning the research into real-world application at scale.

“Only through trials like this can we fast track the application through the broader industry,” he said.

“The ability of asparagopsis to reduce enteric methane emissions is widely known, but the technology is yet to be tested in Wagyu and over 300 days in a non-laboratory environment,” Mr Killen said.

“We have been focused on reducing our emissions intensity for several years and are now tackling our methane emissions head on, with a view to expanding the use across our business.”

Mr Killen said with the public focus on methane emissions, it was important for people to know the industry is acting.

“This process will enable us to set ambitious reduction targets in the near future.”

While the science behind emerging methane inhibiting technologies such as feed additives was sound, there are often significant challenges in maturing them to an operational reality that we can apply at scale.

Once the trial is completed, AA Co plans to move the use of asparagopsis into commercial lotfeeding – as the first step towards scaling-up its use across its entire cattle operations.

“Anybody involved in both pastoral operations and lotfeeding knows it is one thing to be able to control dosing in the feedlot environment, but solving the problem in the rangeland environment is much more difficult,” Mr Killen said.

“We need to get the science right before making commitments around that,” he said.

Soil carbon sequestration

AA Co’s second commitment under its new sustainability framework had the potential to completely change the emerging soil carbon trading market in Australia, Mr Killen said.

A $6.5million collaboration with Food Agility CRC, Cibo Labs, The Mullion Group and CarbonLink, plans to develop an industry-leading remote sensing tool for estimating, managing and forecasting soil carbon sequestration in rangelands.

“This is a very important piece of work – a game changer – and we are very confident that we can pull this off, with our partners,” Mr Killen said.

The global carbon market was currently valued at A$369billion and Australian Carbon Credit Units are tipped to jump from $20 a year ago to $50 by 2030.

Using carbon sequestration to earn and then trade credits currently relies on expensive soil tests that price companies even of AA Co’s size out of the market – let alone smaller operations – and reduces the incentive for improving soil quality, Mr Killen said.

“It can cost more than $20 per hectare for standard tests, which we estimate would be $128 million just to baseline AA Co’s entire operations – and it would take three to five years – a major barrier for most farmers, even on a smaller scale.”

He said farmers are the custodians of a rich natural resource that is integral to reducing greenhouse gas emissions and the fight against climate change.

“If we can lower the cost of measurement across the entire industry, this opens the door for thousands of Australian farmers to participate in the growing carbon market – creating new revenue streams that reward sustainable practises – and ultimately that’s what this is all about.”

“Through alternative farming practices, we can maintain or increase soil carbon, which in turn reduces atmospheric carbon. No other industry can sequester carbon like this,” he said.

“But we can’t do it without the data. We need to know the baseline and change over time.

Natural Capital

Under its third sustainability commitment, working alongside a company called Accounting for Nature, AA Co will develop an industry first methodology for measuring change in natural capital values, such as biodiversity at scale in northern Australian rangelands.

“We will then use this methodology to drive improvements in the health of our natural capital,” Mr Killen said.

Natural Capital referred to the elements of nature including air, water, soil, geology, and all living organisms that come together to provide the fundamental services required to support life, he said.

“It’s the foundation of everything we do and investing in the protection and regeneration of nature through this scientifically robust measurement and reporting process, is fundamental to our business and the sustainable production of food.”

Animal health and welfare certification

Another of AA Co’s five commitments covers animal health and welfare. The topic was at the heart of AA Co’s operation, Mr Killen said, but there was a gap in certification particularly as it relates to northern Australian rangelands.

As part of this process, AA Co has committed to developing an internationally recognised Animal Health and Welfare certification standard for extensive beef production by 2024.

“Certification opens markets, commands price premiums and provides a framework to drive improvement in practices,” he said.

“We will pursue our commitment to the Five Domains of Animal Wellbeing by working with key industry partners to develop an internationally recognised certification standard.

“It will help drive innovation and improvement in the already high standards that exist in Australia.”

The Wylarah Institute

AA Co will establish a fund aimed at helping turn this type of sustainability science and research into real world action.

The Wylarah Institute, an expert climate and nature advisory group, will be established to guide investment of around $500,000 a year.

Mr Killen said the fund will help fill the gap that currently exists between research and development, and the operational application of various innovations.

“Some of these emerging technologies have the potential to significantly improve environmental outcomes in both the north and across the Australian agricultural industry,” he said.

“Feed additives are one example, but it could involve emerging disruptive agriculture technologies, commercialisation pathways for traditional food products or much more.

“As an industry we’re faced with multiple challenges including flood, drought, global competition, geopolitical tensions, biosecurity concerns, changing consumer preferences and more.

“More than ever, the industry needs new practices that can be implemented at speed and scale. We want to make that happen, whether it’s through seed funding or access to our value chain to test different technologies.”

Setting the standard

Mr Killen says the framework and the company’s five commitments showed AA Co was taking its responsibility for sustainability seriously.

“The framework embeds sustainability at the core of our business and will be used to prioritise our activities, set goals and hold ourselves accountable,” he said.

“We recognise our responsibility to mitigate our climate impact and to produce food in a way that benefits future generations.”

 

 

 

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Comments

  1. Russell Pearson, 22/11/2021

    Fortunately I only have a few shares in AA co. and was not aware that the company was so socially committed. I have only been a share holder for about ten years and never seen a dividend! I am now aware why !

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