In the past three decades, smart-climate and sustainable production technologies have been adopted by farmers in many agricultural producing countries around the world.
These smart agriculture practices and technologies – various crop certification and traceability standards promoted by commodity trading firms to create environmentally sustainable value chains – also deepened the connections between farmers and consumers.
We need look no further than the global coffee industry to demonstrate how these certifications and traceability standards not only contribute to sustainable value chains/landscapes and supports farmers, but also motivate consumers to buy specific products.
In Australia, even 7-Eleven offers Fairtrade coffee (80 million cups a year, according to the company). The first Fairtrade certified beans were produced internationally in 1994, and the first roaster in Australia wasn’t licensed to sell certified Fairtrade coffee until 2003.
Since 2016, global sales of Fairtrade coffee have grown from 186,000MT to 222,000MT. Did this change to a product that pays a premium to producers gain an overnight foothold? No. Has it generated premiums for farmers? Yes.
In coffee and cocoa, increasing adaptation of crop certification and traceability standards is observed over decades in many producing origins. By adopting good practices and eliminating waste practices/excess inputs has shown increasing production and profits for the growers and other supply chain factors. These certification and traceability labels (e.g. Rainforest Alliance, or 4C), have created a very well-established premium/speciality coffee markets for these products.
The demand for carbon neutral and traceability label products is very high and increasing.
An Asia-based market intelligence company predicts that by 2024, 50% of the Asia-based 200 will capture their carbon data and report on their enterprise-wide carbon footprint using quantifiable metrics. This might have some impact on Australian-based ag exporters, if they are part of the relevant supply chains.
And the European Union aims to be climate-neutral by 2050. In late 2022, the EU voted to impose a carbon dioxide emissions tariff on imports of goods such as steel and cement, a world first. According to the Australian Financial Review, companies importing those goods to the EU, will have to buy certificates to cover the embedded CO2 emissions. The EU will revisit the products subject to this Carbon Border Adjustment Mechanism (CBAM) in 2026. (Agricultural imports are currently not included.)
Australian farmers and industries have the capacity to demonstrate they meet the changing requirements of their international customers, using advanced digital technologies and knowledge. Further, it has a huge potential to explore new markets for some the products and increasing value of Australian agriculture production/exports.
Increasing adoption of these new technologies to meet changing customer requirements has the potential to lead to improved diversification and economic returns for local rural communities, and drive towards green food chains and ecosystems.
Useful links on some of the international coffee industry’s standards:
And for more information on the challenges coming up for the world’s coffee supplies, you can read a paper I contributed to, Synchronous climate hazards pose an increasing challenge to global coffee production.
If you have information to share, please contact Vivek on Vivekananda.MittahalliByrareddy@unisq.edu.au.