Market access

Market access, rather than price premiums, could become a key driver of carbon/methane reduction progress

WHO is ultimately going to pay for the carbon and methane reduction work in Australia’s red meat industry?

The subject was discussed at an Australian Agribusiness Association rally held in Brisbane yesterday.

MP Managing Director Jason Strong, BDO Director Responsible for Sustainability Brett Spicer and Anna Speer of Woolworths Greenstock pictured during the panel discussion at yesterday’s AAA breakfast in Brisbane

Market access for Australian beef, rather than price premiums, is likely to become a key driver of future progress on carbon and methane reduction, stakeholders attending the meeting said.

The AAA breakfast included a panel discussion moderated by the CEO of Woolworths Greenstock Anna Speerdialogue with the Managing Director of Meat & Livestock Australia jason strong and BDO director responsible for sustainable development, Brett Spicer.

“There’s an interesting discussion about consumer preferences in all of this,” Spicer said.

“Is this journey to carbon neutrality that the red meat industry is taking a competitive advantage and therefore getting some sort of premium for a carbon neutral or low methane product, or is it it just to be able to access certain markets?” He asked.

“It would be interesting to see some research done by MLA and others, but my gut feeling is that it’s going to be more about getting into certain markets here and abroad, and maybe being able to stock your product in Woolworths or Coles stores, or whatever.”

“So it’s the consumer who ultimately pays, when buying a steak with a carbon or methane claim. But also, I know I come from a relatively privileged position, in that feel like I can walk into a supermarket and buy whatever steak I like, whenever I like.

“From the perspective of a red meat consumer, I don’t think I can expect the cost of carbon neutral beef to be borne by the farmer. But then not all consumers have the luxury of being able to pay the extra price per kilogram that can be attached to carbon neutral beef,” Spicer said.

“If we export chilled Wagyu beef to a customer in the Middle East or North Asia, they may have the ability, or ability, to pay an increased cost to account for the carbon footprint. But if he sends live beef to Indonesia, and they’re lucky enough to eat a few kilograms of beef a year, it’s about protein and food – and that cost imposed on a kilogram of beef is going to be very significant. .

So the elasticity of demand in a place like Indonesia was going to be much greater than it might be in Australia or Japan, he said.

“Do they then switch from beef to chicken, or something else?” The impact is going to vary from market to market, but ultimately it will be borne by the consumer, otherwise we don’t have viable farmers. »

Productivity factor

MLA general manager Jason Strong said who pays will depend on several factors.

“If this was something that was going to be imposed on us by a government, then we would say there should be a discussion about compensation. But beef is going to fall out of range very quickly for what’s being offered by the government – while the national target is 43% we’ve cut emissions since the 2005 baseline by 51% so we’re home and watered. But are we paid for it?

“But in the meantime, if we get there through productivity increases, are we going to share the benefits of that productivity improvement with anyone else? I would say no,” Mr. Strong said.

“In the meantime, even if nothing is imposed on us that could increase our cost base without any associated benefit, let’s drive productivity first,” he said.

“If we can solve this carbon/methane problem at the same time as we increase productivity, then the relevance of an ACCU becomes much less important, because we get this productivity advantage.”

“Soil carbon sequestration is a good example. Increasing soil carbon increases the water holding capacity and use of available precipitation. Effectively, you have more productivity than you might have had otherwise. Quantums of this can be hundreds of millimeters (of rain) and the benefits of this will far outweigh any ACCU catch-up, compared to the cost associated with it.

“Beyond the carbon scorecard, the benefits to the grower will be increased productivity, increased soil cover, reduced erosion and greater biodiversity.

“It’s this balance between how we’re moving forward, and the red meat industry is incredibly well positioned for what we’ve already done, and what’s to come (mitigation tools methane, etc.) to stay ahead of any of those targets that can be set,” Strong said.

Entrance fee?

When asked if carbon-neutral and reduced methane would end up being part of the “price of entry” for the beef industry, AAA committee member Anna Speer said what the industry is not doing not yet good was to tell the story of the progress of red meat in this space.

“People (growers and supply chains) are already doing a wonderful job, but we haven’t yet captured the baseline data to be able to demonstrate this – whether it’s planting weeds, loss in feedlots, methane-reducing feed additives, or holistic or rotational grazing systems.

“In my mind, the expectation is already there – the consumer expects the farmer to do the right thing from a land and animal management perspective – but we have to get better at telling this story,” she said.

From a data perspective, 36% of retail customers said they would pay for more sustainable products. But while it was easy to “check that box” in a survey, when it came to the actual shopping habit, walking down the aisle, it didn’t always translate to those decisions, Ms Speer said.

“But there are certainly supply chains that are already getting premiums for carbon neutral products. The brand experience that has unfolded over the past 20 years will play a role, but we should all definitely be looking at how we are reducing carbon in our supply chains, for all of our products.

Mr Spicer told the rally he was relying solely on ‘barbecue talks’ because a society’s consumers wanted to ‘do the right thing’.

“But there is a knowledge or understanding gap between the person who preferentially says they want carbon neutral beef, to understanding what that means and how to actually get there.

“This gap needs to be filled – by the news media, industry custodians, etc. But I think carbon neutrality will become a matter of market access – and it will probably come in a rush,” said said Mr. Spicer.

“The idea of ​​renewable electricity was new only eight or ten years ago. But since the squeezing of electricity prices in 2017, there has been a rush to install rooftop solar panels. Now the percentage of Queensland households that have panels on their roofs is huge. The same trend is happening with electric vehicles. So things can change quickly, and I suspect this question of market access for red meat on carbon footprint will be the same, happening quite quickly.

Business decision versus brand decision

MLA Jason Strong said it would be interesting to see how this (the consumer drive) played out on carbon, methane and environmental claims.

“Climate change was the most important issue in the recent federal election. In the Australian domestic market, the business decision (whether to shop at Coles or Woolworths) may be more important,” Mr Strong said.

“Currently, consumers make many decisions before walking through the sliding doors.

“Once they walk through those doors, they’ve made an overall decision about the produce in that store. Sometimes it’s all produce, and sometimes they can buy groceries from Woolies and pick up the beef from a butcher. independent at the front.

“But I think that (carbon/methane/environment) will be one of those things that lines up with the trust in the retailer store they walk into. The value of the individual red meat brand will absolutely be there, but the overall confidence in a supermarket retailer’s position and policy will also be there.

“This is an opportunity for the red meat industry to work with retailers, telling a story about the environmental credentials of Australian red meat. And this also carries over to international markets when speaking with customers abroad. »

“For any other beef-producing country to comply, they’re going to have a harder time than us, but the first thing they understand is what we’re being asked to do,” Strong said.

Tomorrow: CN30 – “It’s amazing how many red meat players now ‘own’ this decision”