Dairy farmers need greater financial incentives in order for them to meet the 30% carbon reduction by 2030 targets that have been set by government and retailers.

That was the message from Kite Consulting's Becki Reay speaking at the DairyHub at today's DairyTech who voiced that the industry will have to increase efforts to meet these targets to avoid pressure to reduce production and consumption.

In 2020 Kite Consulting published a report into what levers dairy producers would need to pull to reduce their carbon footprint in the following decade. While some farmers have made real progress, encouraged by the milk processor, carbon data, as seen in the model below, shows the industry is not on track to meet its target. With many already activating the 'low hanging fruit' of carbon-reducing activity, the amount of work ahead should not be underestimated.

"Those farmers not engaging with carbon reduction might find they do not have access to new contracts or even keep their existing milk contracts. Alternatively, they might receive a lower milk price, and with the growth of green financing may have more expensive borrowing costs or no access to borrowing at all," said Becki.

"In order to leverage quicker change, processors will need to pay for carbon reduction – the figures as well as the actions and outcomes," she added. "We need to be in a position where farmers with lower carbon footprints are rewarded for the actions they have already taken as well as incentivised to take the actions that will reduce it further.

In some cases retailers are funding, through processors, activity that reduces carbon footprint without increasing production efficiencies because they need to show faster progress towards their 2030 targets. The willingness to pay for carbon reduction is there, it just needs to channel it in the right direction.

"We have the data to show improving feed efficiency and genetic improvement, through genomic testing and breeding, will lead to the greatest carbon reductions for most farmers. The sooner all farmers are given the confidence that they will be rewarded for their carbon score and actions taken which directly reduce it, the sooner we will see farmers focus efforts and deliver the accelerated reductions needed to meet 2030 targets.  And with only five years until then, and a need to speed up progress, it can't come soon enough," Becki said.