The accelerating pace of the net zero transition means that all high emitting sectors, including agriculture, will undergo a high pace of change and scrutiny. There are new trends emerging from the imperative to reach zero that are shaping the needs of the market and there are opportunities for growers who adapt swiftly to serve these needs. These trends include companies seeking low emissions suppliers, increasing emissions scrutiny by financiers, consumer climate savvy, increasing scrutiny on land use and emissions shaping international trade. Growers who respond quickly can capture new opportunities, while those who do not risk facing a rate of change and market expectation that outpaces the positioning of their business.
We interviewed growers, financiers, retailers, food and beverage companies and processors along agrifood value chains found six key opportunity areas for producers who embark on initiatives to reduce their net emissions: price premiums, new market access, favourable cost of capital, insetting, baselining support and strengthened supplier relationships. Conversely, we also found six risk areas for producers who do not keep pace with the net zero transition: loss of market access, price erosion, increased cost of capital, input cost volatility, regulatory pressure and threat of product substitution. To take advantage of opportunities and mitigate risks, growers will need to be able to demonstrate that they are taking steps to materially reduce emissions and, where possible, sequester carbon.
Both growers and their partners along the value chain are facing similar pressures as the net zero transition accelerates. Agrifood value chain actors have an opportunity in their mutual interest to collaborate with producers on net emissions reduction and generating shared value. Aligning incentives to reduce net emissions and working closely with producers towards net zero will support agrifood value chain actors to reduce their carbon risk, limit offset purchasing exposure, serve emerging consumer preferences and meet net zero targets.