Carbon: Farmers, The Food System Needs You to Clean Up Emissions for the Whole Chain!
Global food systems produce one-third of all manmade GHG emissions. About 90% of emissions from retail, food producers, G&O merchants and farm inputs are scope 3 emissions, i.e. indirect emissions other than from energy. In the case of G&O companies, scope 3 emissions make up 55%, and are basically the crop and livestock products originated from farmers. As companies in the food chain look at their supplier to help to cut scope 3 emissions, and the farmer is the last one in the chain, the whole F&A industry actually looks towards farming to solve food emissions.
Report summary
G&O companies need to lead the transition to carbon reduction in farming by setting their own ambitious targets. They have committed, and are working towards, zero deforestation in their supply chains and promote sustainable farming practices. To generate value for farmers and the chain, G&O companies will be required to deliver knowledge and technology to farmers to ensure proper monitoring and credible carbon reduction traceability. Finally, the collected carbon credits will need to be marketed in accordance with a standard desired by purchasing companies inside and outside the F&A sectors, who use it to offset their own carbon emissions. On top of this, we also expect the demand for ‘low and net-zero carbon intensity’ G&O to rise, which requires changes to the supply chain to allow it to service the different types of traceability desired by food producers e.g. traceable to a set of farms, or maybe even to specific farmers.
Whether consumers will pay a premium for low carbon food is far from certain. And even for food products which generate some premiums at retail or restaurant level, it is not always certain whether the farmer will benefit financially. However, it is clear that farmers will see increased costs, potentially reduced crop production upon adopting new farming practises, and greater uncertainty as to whether their investment will pay back.
Farm-generated carbon certificates are likely to have a better potential to pay extra income to farmers in the future, while we see direct price premiums on the sold G&O products to remain rather niche. Again, it remains to be seen if the carbon payments will cover the costs of the additional farming effort.
The overall goal needs to be an increase in sustainable food production (environmentally and financially), to ensure global food security. The latter might be threatened by potentially declining yields, and productive farm land used for carbon reductions only (e.g. with a shift to forestry or minimalistic food production).
