By Heinz Flatnitzer, Global Head of Emission Value Management at dsm-firmenich Animal Nutrition & Health
A holistic approach to emissions reduction in the food sector requires accurate footprint calculation. The solution lies in harnessing farm-level data (i.e. primary data) for precise measurement and improvement.
How to achieve greater sustainability has become an essential topic for food companies today – with planet-friendly products emerging as a major driver for increasing market value. According to a Sustainable Market Share Index 2021 report from the NYU Stern Center, 48% of producers incorporate and communicate the “sustainability” of their products, while sustainability-marketed products enjoy 2.7 times faster growth over conventionally marketed products.
This sustainability shift has been accompanied with greater value chain scrutiny and demand for accountability, pushing companies to consider and measure their environmental impact holistically – going beyond their direct impact, focusing on indirect emissions along their supply chains (i.e. deforestation, CSRD, scope 3 emissions, etc.).
Figure 1. 90% of food retailers' footprint comes from scope 3 emissions.
Scope 3 emissions are particularly relevant for the food industry, with a large share of the food products’ emissions originating at farm-level. In fact, 90 per cent of the carbon footprint for food retailers comes from their scope 3 emissions—with agriculture representing a significant portion of the upstream footprint. Up to 80% of the footprint of animal protein (meat, milk, eggs and farmed seafood) occur on farm or are related to what the animals themselves eat. In other words, the agricultural sector must be involved for downstream players (e.g. retailers, CPG companies) to reduce their scope 3 footprints.
Food companies today need the right tools to prove their credentials with reliable reporting – and most importantly – to limit their scope 3 emissions. Access to direct, accurate farm-level data, commonly referred to as “primary data,” fills this demand gap. It provides precise and accurate measurement, coupled with actionable insight into areas for improvement.
Fully relying upon historical averages or proxies, referred to as secondary data, does not accurately reflect the value chain’s true emissions and therefore cannot be used to identify opportunities for footprint reduction. This matters because every farm is different.
There are huge differences among producers, even in the same region. A dsm-firmenich study on the carbon footprint of 18 farms for pig fattening revealed a twice as high difference between the farms with the highest and lowest emissions levels. This leads to a high level of uncertainty for decision-making if based on average data only.
To get farm-specific insights that drive clear decision-making and real sustainability improvements, a farm’s own ‘primary’ data is needed.
Only through direct measurement of primary data can the entire supply chain, including feed mills, farms, processors, food companies and retailers, have an accurate picture of their footprint. And even more importantly: only the transparency of farm-specific footprints will lead to a “race to the top” that motivates producers to improve their own footprints. From there they can work with the value chain players on sustainability programs to incentivize greener production practices.
There are many other reasons why footprints based on primary data is important. The trend of product eco-labels clearly supports the use of primary data. Secondary data is seen as an intermediate, provisional step. In addition, agrifood companies’ sustainability credentials are especially important when it comes to accessing capital. Banks do not make decisions based on industry averages – especially when considering data deviations in agriculture emissions.
Animal nutrition, farm management and operational improvements can reduce the carbon footprint of a dairy product such as cheese by up to 37%, by improving animal productivity, inhibiting methane production and reducing food loss and food waste. Similar strategies can be applied to significantly reduce the environmental footprint of other animal proteins such as pork (24%) and poultry (17%), according to the FAO.
Figure 2. Steps to reduce the environmental footprint of dairy products
When getting started with footprint measurement, many people struggle with collecting all of the relevant primary data. While farm-level reporting is a clear gamechanger for food companies tackling scope 3 emissions, improving their footprint accuracy using primary data is a journey. This journey starts with obtaining data from suppliers about feed and similar areas, which can then be extrapolated across the operations as confidence and familiarity increases, as shown in Figure 3.
As companies increase the proportion of primary data used in their footprint reporting, further opportunities emerge. In the first instance, greater use of farm-level data reveals hotspots where operational and sustainability improvements are needed. Further along, market opportunities such as sustainability-linked financing and eco-labeling emerge.
The journey to accessing primary data also comes with its share of hurdles along the way. Despite the high interest in farm-level reporting, many industry leaders today point to challenges in using more primary data, namely the availability of data from suppliers and the time & cost of data collection. Learning from best practices is thus key.
Fundamentally, the journey must be underpinned by two key areas: incentivization and collaboration. The right conditions must be created to incentivize farmers to provide the data with as little effort as possible, coupled with strong collaboration spanning across the whole supply chain to support accurate farm-level data generation.
Breaking down the best practices to consider:
Agriculture is an important factor to improve sustainability. It must be a balanced approach in which every participant in the value chain benefits in order to be successful in the long term. Farmers and agricultural producers are key to making the progress in emissions reductions.
The journey towards securing primary data can be long and complex, with both leaders and laggers emerging in the process. However, in the age of digitalization, the winners of this journey will be those that leverage technology to simplify and accelerate this journey and get ahead of competition when time is of the essence.
Most importantly, the digital transformation enables food companies to access key up-to-date data - aligned with the evolving nature of animal production, technologies and leveraging best practices. Software as a Service (SaaS) platforms like Sustell™ leverage farm-level data to calculate the environmental footprint of animal proteins. Read more about life cycle assessment of animal proteins.
SaaS systems combine the best practices outlined above via an automized system – ensuring quick and easy collaboration, and at the same time, ensuring ease-of-use – while guaranteeing accurate results with a click of a button. They are increasingly being adopted to provide clarity and transparency to the food and feed value chain with regards to sustainability.
In conclusion, reducing environmental emissions in the food sector hinges on the accurate measurement provided by farm-level data. As the demand for sustainable food products grows, companies must move beyond secondary data and averages, embracing primary data for precise emissions reporting and impactful mitigation strategies. The journey towards comprehensive primary data use involves gradual steps and collaboration across the supply chain, supported by digital tools that streamline data collection and analysis.
Success requires incentivizing farmers and adopting best practices for data management. By leveraging primary data, the food industry can significantly enhance sustainability efforts, improve market value, and secure access to capital, ultimately contributing to a greener future.
12 August 2024
