Unlocking Value in Biodiversity, Carbon and how Cattle Contribute

on 8th September 2023

Landholders hold many of the trump cards in the unfolding game of reducing carbon emissions and rewarding ecological performance, but external pressures are likely to increase, and all parts of the agricultural supply chain have a critical role to play in setting the social and scientific rules for how that game is played.

This was the central message from the Gyranda Open Day at Theodore on Thursday, September 17. In what was something of a deviation on the usual themes of beef production and the technology employed to do it, this year’s speakers – siblings Peter, Claire and Tom Mahony – discussed all things carbon and natural capital with ABC Capricornia’s Megan Hughes.

“Landholders have plenty of opportunities in a world going headfirst towards trying to reduce the carbon footprint,” says Gyranda’s principal Peter Mahony. As chair of AgForce’s Natural Resource Committee until earlier this year, Peter has been heavily involved in the carbon discussion and developing the AgCarE program.

“However, there are also plenty of threats, and chief amongst those is not having access to reliable, independent information on just what ecological assets I have on my farm, and what the true market value of that is.”

Claire Mahony is Head of New Ventures and Innovation at one of Australia’s largest, vertically integrated beef businesses.  From her observations, there are limited market signals to adequately reward  ‘carbon neutral’ beef across global markets and the cost of directly reducing methane through feed additives remains unviable for widespread adoption.

“So, for producers, any talk of carbon and natural capital has to align with normal production drivers.”

“Producers can generate carbon credits, for example, though the Beef Herd Methodology. In many respects it is a win-win because the basic premiss behind that methodology is the same premiss that drives profitability in most beef businesses: turn cattle off sooner and heavier.”

Stakeholder expectations also have a role to play. Something that Tom Mahony – Senior Director – Supply Chain for McDonald’s Australia knows only too well.

“At McDonald’s, where our food comes from and how it is produced matters to our customers, communities and the environment”, says Tom. “As one of the biggest buyers of Australian beef, we know we have an important role to play in working with the industry to achieve emissions reductions”

“Our observation is that customers will always want great quality and great value. At McDonald’s we have already, and will continue, to work with our supplier partners and invest in the supply chain to accelerate innovations in this space.”

The ACCC have recently become quite vocal in calling out those companies that are “greenwashing” their environmental credentials, so the reality is that claims will have to be backed up by data.

The panel suggested that it will likely become an expectation from customers alongside food safety and affordability, rather than an opportunity to earn a premium price.

“Although price premiums may be challenging to achieve, creating value to incentivise decarbonisation activities will be critical for uptake”, says Claire.

“Insetting and collaboration between actors in the value chain may be part of the puzzle to incentivise producers for those on-ground decarbonisation activities that only producers can undertake.”

“Pressure is mounting on the large food and fibre companies to account for their emissions and their ecological footprint, so supply chains are increasingly looking for both information and solutions from their suppliers. Importantly, I think most companies recognise the value in this and I think we will see more rewards from initiatives, such as insetting of carbon, flowing back to those who produce the food we eat,” suggests Tom Mahony.

What the group did agree on was that government policy towards decarbonisation in agriculture and evolving markets for biodiversity and natural capital was far from set in stone, and that every sector of agriculture has an important role to play in driving that narrative.

“My experience is that government is genuinely looking to work with agriculture, especially our R&D sectors, to help us devise solutions. Corporates have an important role to play in articulating our needs to government with data to back up the narrative,” says Claire.

Peter sees a small, but growing number of farmers taking advantage of the opportunity to run their farms for both production, and ecological improvement, and being well rewarded for it. “Carbon, biodiversity and the emerging natural capital market is not for everyone, and many of us just don’t have the headspace to take it all in right now. Over time, however, I think the market signals will be clearer and the true “champions” of industry better defined so that the pathway to success is much clearer.”