Panel Highlight: Radical transparency drives sustainable agrifood futures

May 7, 2021
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Blog

Panel Highlight: Radical transparency drives sustainable agrifood futures

Mara Bun shares highlights from expert panel 'The rise of sustainability, climate change and carbon markets as supply chain drivers'

May 7, 2021
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Digital meets sustainability: Radical transparency drives sustainable agrifood futures

Highlights from the expert panel The Rise of Sustainability, Climate Change, and Carbon Markets as Supply Chain Drivers by Mara Bun, Strategy Lead (Former) at Food Agility CRC

Woolworths Chairman Gordon Cairns shared riveting insights in the first Food Agility Summit 2021 keynote about our Covid new normal. Our panel brought three of Gordon’s key themes to life.

1. “Do the right thing, because it’s the right thing to do.”

Woolworths customers catapulted online at exponential speed through Covid. E-Commerce sales grew at a gradual linear pace between pre-2019, then jumped four-fold to smash Woolworth’s 2023 forecast level in 2020.

Customers went online for groceries in particular. By releasing online tools and innovative pick-up options, Woolworths is baking in digital shopping, with 30% of customers saying they intend to continue buying online.

“We have innovated more in this short Covid period than in last 5 years” - Gordon Cairns, Chairman Woolworths

At the same time, conscious consumers are raising the bar for business. According to Woolworths research, consumers want local food, and 66% of customers say that taking care of the planet is important.

Panellist Molly Harris Olson, CEO of Fairtrade ANZ, suggested ethical purchasing has become a powerful global trend. According to the Global Web Index measuring consumer trends across 20 countries, 74% of people surveyed in the Covid era placed an increasing importance on sustainability. 41% said they seek involvement in sustainability in their local area. To connect farmers in the developing world to consumer markets that value sustainable development, digital transformation is a top strategic priority for the US$15 billion Fairtrade system.

“Fairtrade has been engineering fairer supply chains for 35 years: our robust, transparent traceability needs to be transformed into real time decisions at cash register.” - Molly Harris Olson, CEO Fairtrade ANZ

2. “If you don’t measure it you can’t manage it”

For Gordon Cairns, the ability to measure using digital tools is what will allow farmers to enter the productivity loop. Fairtrade agrees that connected farmers who can measure inputs, record transactions, access remote quality training, and demonstrate provenance will get big gains from digital. Molly Harris Olson believes farmers can triple their sales through digital enablement, including by accessing carbon market income streams.

Sonia Nazaretian, Director of Retail and Commercial Enterprise at Microsoft, brought the importance of measurement to life . When taking on a societal issue like climate change and creating a response that is driven by modelling, Microsoft is working at the intersection of technology and natural and social sciences. Their local team of sustainability scientists collaborate with research, government, business and NGOs to see create new knowledge and tools that support Microsoft’s net positive goal by 2030.

“Really being grounded in science and maths is what matters when you are led by the scientific consensus in your climate response.” Sonia Nazaretian, Director of Retail and Commercial Enterprise, Microsoft

Microsoft is investing US$1billion into a climate innovation fund scale up technologies that address carbon, water, waste and ecosystem challenges. They have thrown down the gauntlet to other global tech leaders by procuring 1.3 million metric tonnes of carbon from 26 projects in 2020, two in Australia.

Raf Wood, MD of Market Advisory Group (MAG), framed Microsoft climate action alongside a fast-growing Australian carbon market on the back of drought, bushfires and Covid, and the speed of corporate climate responses despite political uncertainty.

MAG has deep visibility on carbon project economics across Australia. Not surprisingly, when it comes to the long run marginal cost of supply, volume goes up as price rises. As the various approved land restoration methods scale (including soil carbon, above ground vegetation, savannah burning) those that achieve higher prices will require more capital expenditure. According to Raf Wood, only a few projects with capex intensity are viable at the current carbon price of under $17/tonne but finance and technology innovation will support farmers to participate.

MAG’s low case scenario, which reflects current policy settings and growing net zero commitments, suggests the Australian voluntary carbon market price will grow from over $16/tonne today to over $35/tonne by end of this decade. MAG’s high side scenario sees prices increase to $50/tonne by 2027.

“Depending on changes to demand by voluntary action and global policy (EU trade and tax adjustments) we could see carbon prices rocket over coming years. If the cost to a farmer of carbon abatement is $25/tonne or less and the price is $50/tonne or more, there is profit ahead” - Raf Wood, MD Market Advisory Group

Soil carbon is an area where data is key – and gathering it is expensive. Measuring soil carbon with traditional samples and comparing results to remote sensing satellite data will deliver better, scalable technology that brings the costs of carbon farming methods down the cost curve.

3. “Radical transparency: the new normal”

Gordon Cairns revealed that Woolworths has become Australia’s most trusted brand through Covid. The truth of the matter, he reflects, is that trust is hard to gain but easy to lose.

“If you lose the trust of your customers, they have the option to go elsewhere.” - Gordon Cairns, Chairman Woolworths

NFF CEO Tony Maher agrees that trust is necessary for farmers to be rewarded for doing the right thing in sequestering carbon and supporting biodiversity. If we can scale up technologies that can measure carbon and conservation and align sustainability standards across diverse farming systems, our farmers and the planet can prosper. Will farmers trust that money for carbon and sustainable farming will flow? Without trust and certainty, farmers will not fully benefit from the opportunity that lies ahead.

“NFF have a target of 5% of farmgate value by 2030 – that represents a $20 billion industry by 2030. There is a lot of work to do to get us there because metrics and measurement is critical.” - Tony Maher, NFF CEO

Covid has turned our minds to local food and our local environment, with digital technologies and data underpinning the trust and transparency necessary for farmers, consumers and the planet to truly benefit from the sustainability mega-trend.

As the first Food Agility  Summit 2021 Panel came to a close, panellists reflected on a tantalising possibility. NFF’s 2030 roadmap aims to grow farmgate value to $100 billion from its current $66 billion level. Achieving a gap of $34 billion in production value in the next 7 years seems a tall order. But if we think about ecosystem payments in revenue equivalence and assume a 5% profit margin, the goal may be achieved by generating $1.7billion in carbon and biodiversity stewardship payments.    

“If we get the tech methods right, and build certainty, farmers will have a crack at it. Don’t worry about that.” - Tony Maher, CEO NFF

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