Farming News - RaboResearch: Decarbonizing European grain, oilseed, and sugar cooperatives

RaboResearch: Decarbonizing European grain, oilseed, and sugar cooperatives

RaboResearch: An effective transition to a sustainable food system in Europe requires collaboration across the value chain

Europe is at a crossroads in its journey toward a sustainable food system. On-farm emissions account for over half of the greenhouse gas (GHG) emissions in the EU's food and beverage supply chains. Individual farmers face significant challenges in reducing these emissions on their own. A recent Rabobank report highlights the pivotal role cooperatives can play in decarbonization, advocating for a "whole farm" approach that unites the entire supply chain in sharing costs, risks, and rewards to lower emissions effectively.

Reducing agricultural GHG emissions is key to meeting the EU’s climate goals

The EU's goal for climate neutrality by 2050 hinges on a significant reduction in agri-food system emissions, which currently represent a third of the EU's GHG emissions. With livestock and crop production contributing over half of agri-food supply chain emissions, the agricultural sector clearly plays a critical role. While livestock emissions decreased 21% from 1990 to 2021, crop emissions increased 10% in absolute terms. To tackle these challenges, the EU has placed agriculture at the center of the Green Deal and approved the
Corporate Sustainability Reporting Directive (CSRD), prompting agri-food companies to assess and disclose their GHG emissions and the reduction targets they’ve set (if any) in advance of the directive’s enactment in 2025. European agricultural cooperatives are encouraged to take proactive steps now to prepare for the new legislation.

Farmers need help decarbonizing production

Farmers are at the heart of efforts to reduce emissions in the agri-food supply chain, yet the small size of the average farm in the EU – 17 hectares – poses significant challenges. Commoditization of agricultural products and slim profit margins often prevent farmers from investing in decarbonization. A collaborative effort involving policymakers, farmers, cooperatives, industry stakeholders, and financial institutions is essential for an efficient transition to a sustainable, low-emission crop sector. EU cooperatives are uniquely positioned to support farmers through this transformation.

Cooperatives can play a crucial role in this transition

European cooperatives serve as a crucial link in the EU's supply chain, consolidating products like sugar, wheat, and barley from dispersed farmers in western Europe. They can collaborate with downstream companies and provide comprehensive services to members, including inputs, advice, and market access. Farmers face the challenge of reducing on-farm emissions, which significantly affect the end product's footprint. And although emission- reduction methods are known, equitably sharing costs and benefits along the value chain is difficult.

Collaboration is key to on-farm emissions reduction

Current efforts to reduce on-farm GHG emissions often focus on single crops, aligning with food companies' product-specific targets. However, considering that European farmers typically cultivate multiple crops, a strategy to reduce GHG emissions across all crops in rotation could be more effective, but this approach necessitates collaboration across multiple value chains.

“The European food system is ready for collaboration, particularly in achieving climate and sustainability goals. The uneven distribution of margins and emissions requires a united effort among value chain players,” says Elizabeth Lunik, Senior Specialist Food & Agribusiness, Climate and Sustainability at Rabobank. “While most collaborations concentrate on individual crops, there is a growing need for cooperatives to ensure that farmers also reap the benefits, whether through cost compensation or commodity price premiums.” These cross-value chain collaborations are not only about building sustainable supply but also about meeting scope 3 reduction targets.

Cross-value chain collaborations could unlock greater benefits

For farmers, these collaborations offer even greater potential by addressing whole-farm emissions. They unlock the benefits of regenerative farming and create opportunities for the food and feed industries to source premium crops. Achieving consensus among stakeholders on the distribution of costs, risks, and premiums is essential. Currently, only a few cooperatives are engaged in such collaborations.

A holistic approach can have lasting benefits

A comprehensive strategy that addresses GHG emissions from all crops on a farm could have enduring advantages. “Successful transition programs require support across the supply chain, including indirect beneficiaries such as local governments. The cost of transition, as well as the associated risks and benefits, must be equitably shared to develop a market for sustainable food products,” according to Lunik. European agricultural cooperatives, with their strategic position in the value chain, are key facilitators in ensuring successful transitions within the food value chain.