Supply chain prices tipped to pressure farmers to lower carbon intensity

Agribusiness leaders say supply chains need to be careful not to push too many costs onto farmers in a bid to reduce emissions and improve sustainability outcomes.

Agriculture supply chains need to be careful they do not push too many costs onto primary producers in their bids to reduce emissions and improve sustainability outcomes.

Otherwise, producers would “continue to be squeezed”, supplies of products would be restricted and meaningful improvements would not happen.

This was the common message delivered by two agribusiness leaders at a Net Zero field day hosted by pastoral giant Paraway Pastoral at Willaura last week.

Elders state wool manager Lachie Brown said growers already faced a very challenging environment in terms of costs.

Wool prices are feeling the impact of weakened demand for discretionary items, while costs for all farmers keep rising.

Mr Brown said many wool growers were only just breaking even – a reality Elders brokers had recently shared with “a large multinational brand”, showing them three farms’ financials.

He said the multinational company was “shocked” to learn how difficult wool growers were finding it.

Mr Brown said there was a need for existing sustainability accreditation programs – which assisted the sale of the end product – to be “rationalised”, so participation costs could be lowered for growers.

“Producers are being squeezed,” he said.

“At the end of the day it is break-even at best.”

Mr Brown said without marked improvement in price, “we will continue to restrict supply”.

At the same event, Paraway Pastoral chief executive officer Harvey Gaynor said while Paraway was dedicated to reducing net emissions, he put a challenge to other participants in the supply chain and service sectors to consider their profit margins and contribution.

“We hear about agriculture being part of the problem (but) … feeding people and clothing people is not a problem – the problem is a large growing population and intensive use of fossil fuels,” Mr Gaynor said.

“But we can be part of the solution.

“For those people in the room who aren’t farmers, one really important thing to think about is this distribution of capital and profit throughout the supply chain.

“We saw in a number of presentations the emissions are largely in one place (methane on farm) but everyone is benefiting from the product at the end of the day, and like many other parts of the economy, if we don’t redistribute capital and the income to where we need to make changes to how we produce things, then we won’t be able to make those changes.”

Overseas regulations, investors, and debt and equity financiers were already driving a push for reduction in emissions.

“Supply chains customers will also start to either put pressure on or provide rewards for low intensity production,” Mr Gaynor said.

He said globally Australia was an efficient producer, with Australia’s methane output per unit of meat about half the emissions intensity global average.