WILL there be premiums on offer for slaughter cattle with sustainability credentials?
The topic came up during questiontime in Meat & Livestock Australia’s ‘Impact through sustainability innovations’ webinar held yesterday, as part of a weekly series leading up to the industry service delivery company’s 2021 annual meeting.
“We know there are costs involved with sustainability, but what are the income benefits – are there plans for retail price premiums (for beef carrying sustainability/carbon/methane credentials) to be passed back along the supply chain to producers?” one stakeholder participant asked.
MLA’s program manager for sustainability innovation, Doug McNicholl said insights showed that where a new service (i.e. environmental improvement) was provided alongside red meat production, there was an underlying trend towards that being valued in the broader community.
“The challenge for brand programs, and the marketing story for industry, is to capture the benefit we provide in producing red meat in an environmentally sustainable way, and marketing that to consumers who are willing to reward us for that effort,” he said.
Mr McNicholl said there were some good examples of that happening now, with different brands in the market offering their brand credentials around sustainability.
“The extent to which that flows back through the chain is a commercial arrangement that is still under development. I think brand owners are feeling-out what the new potential value-capture is for brands or products with sustainability attributes. They will then put in place these reward mechanisms to suppliers to ensure that they have enough raw material to meet that demand,” he said.
A second stakeholder asked where producers could get the best ‘bang for their buck’ in the carbon credit market – both now, and in the future.
“It’s probably no surprise to producers, but right now, the best place for a carbon credit is in soil, or vegetation for animal production. Another way of describing that is that it’s best left in the farming system.”
“The Australian farming system is a low-carbon farming system – there isn’t enough carbon in our system as it stands – so anything we can do to build or leave that in a fixed form in the agricultural system in Australia is going to help the productivity of the system.”
“If you then choose to sell it to the market, there are multiple ways to do so. Our insights show that a low-carbon, or carbon-neutral branded beef product, with a carbon credit attached to it, might be a significantly more rewarding pathway to market that carbon credit, than simply selling it in the carbon market in Australia, which at this point is trading at a relatively low value.”
“But that may change over time.”
Another webinar viewer asked what the ‘beef’ was with methane from cattle. Aren’t they part of a natural cycle? he asked.
“Cattle or ruminants absolutely are part of the natural cycle. But the ‘beef’ in the carbon accounting world is that where there is a man-made intervention that might artificially inflate a natural population (ie managed beef production), that is causing an additional amount of methane and global temperature rise. It goes beyond what might be considered a ‘natural’ system,” Mr McNicholl said.
“That’s one element of the equation – ensuring that when we have reached a static global herd and flock, which we largely have, that we are not artificially inflating that beyond what might occur naturally.”
While on the topic of natural cycles, Mr McNicholl said it was also important to note that the carbon found in methane from ruminant digestion would ordinarily have made its way to the atmosphere in one way, shape or form – even if it wasn’t via the digestive process of a ruminant.
“So it is deemed not necessarily new carbon to the atmosphere. It would have got there anyway, in one form or another.”
“What is new carbon to the atmosphere is Co2 released from fossil fuel combustion. So it is important that when we look at the carbon cycle, that as a global community, we are really focussed on what is additional carbon to the atmosphere – and that is fossil fuel use.”
“There are some interesting insights emerging from that work.”
Another question asked how much of the red meat supply chain would be covered by the industry’s CN30 program, whether products would be carbon neutral up until the time the animal hit the abattoir, and whether abattoirs, cold storage, distribution and retail would be covered by CN30 work.
“There’s two ways of answering that question,” Mr McNicholl said.
“From the top down, the Australian government’s national GHG inventory account provides a whole picture of the economy. When we talk about 53pc reduction in red meat emissions over time, we utilise the whole of the red meat industry’s statistics – how much emissions are occurring in the industry, how much carbon storage is going off, and the overall progress as an industry.”
“That enables us to make the statements that we do – domestically and internationally.”
When it came to the mechanics of individual entities within the industry, however, that was a ‘bottom-up’ approach, he said.
“Brand owners wishing to engage and make claims, then have to construct their own carbon account, to show where they currently are, and progress over time, such that the entity can validate their claim,” Mr McNicholl said.
“That’s connecting a producer with a lotfeeder, or a producer with a processor, in having their own carbon accounts completed, such that when a brand is generated, claims that go on the pack have been measured and verified within that supply chain system.”
“We’re seeing that happen already. There are a number of beef brands in the market at the moment – the Northern Australian Pastoral Co’s Five Founders brand, for example – but there are various others already trading under these terms.
“That’s how they reach that point – they have developed their own carbon account, and are managing their emissions over time.”