Pressure on agribusiness to be more compliant says 2022 State of Agribusiness in Australia report

May 14 2022 - 4:00am
Compliance will be a big challenge

THERE is a growing need within Australian agribusiness to adhere to more stringent compliance measures.

Central to this are changing elements within environmental, social and governance sectors across agribusiness and their impacts on farming.

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This week Farm Weekly concludes its feature of edited excerpts from national audit and accounting firm RSM Australia's report, The 2022 State of Agribusiness in Australia, by looking at farming's obligations, including updating practices to meet a net zero carbon emissions by 2050 objective.

FROM an environmental standpoint, farmers and others across the agricultural industry must take steps to meet the Federal government's commitment to achieving net zero carbon emissions by 2050.

Part of this involves moving to more sustainable production systems, as well as investing in more carbon-neutral practices and working with more environmentally friendly vehicles and machines, the RSM report points out.

To date, the National Farmers' Federation and the Federal government have pledged to support a zero emissions target including agriculture by 2050, but with caveats notably excluding methane emissions from ruminant animals like cattle - the worst offender.

The latest technologies available offer some hope that methane emissions can be dramatically lowered by up to 70-80 per cent through commercialising asparagopsis, an anti-methanogenic seaweed which can be added to feedlots rations and lick blocks for pastoral properties.

Some major agribusiness companies have also committed to net zero emission targets, as have agricultural sectors like the grains and livestock industries.

The Federal government in March pledged to give farmers a tax break worth $100 million selling carbon credits and biodiversity certificates into the farm management deposits scheme, to help farmers average incomes across financial years, in return for the National Party of Australia's support for a net zero by 2050 target.

AFGRI Equipment Australia commercial director Wessel Oosthuizen said while the net zero by 2050 target had been set, "it's not yet been regulated or made a legal requirement in the agricultural industry, meaning farmers can decide when and how to change their practices to be more sustainable".

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"While it is essential to the future of the industry that producers take steps to eliminate damaging practices, it comes at a financial cost," Mr Oosthuizen said.

"Tier 4 engines are currently the most sustainable and environmentally friendly engines available within the agricultural industry.

"However, it is also currently up to $30-40,000 more expensive to invest in a Tier 4 unit and, until this is regulated, many farmers will continue to choose the more cost-effective option.

"To encourage investment, there will need to be a big drive within the industry to phase out Tier 3 and previous machines in preference for Tier 4, either through regulations or with the help of government incentives."

Fraser Cuthbertson, chief financial officer of The Pentarch Group which has forestry and agriculture interests, said environmental, social, and governance (ESG) presented particular opportunities in industries like forestry.

He said these can range from one extreme such as mechanical or automated harvesting, which saves on labour costs and ensures proper fertilisation and water usage, to the other extreme where forestry residue can be turned into biofuels.

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"Forestry has an essential role to play in terms of reducing carbon emissions as well," Mr Cuthbertson said.

"Innovation is critical to help identify new ways that trees and their by-products can be processed to ensure every part of a tree is used and then replaced.

"One of the biggest challenges is around education.

"There's currently a disconnect between governments and the different drivers and views that exist around plantation investments.

"This needs to be addressed and solved to help bring forestry into the future and to identify new ways of making the industry more sustainable."

On the push for zero carbon emissions by 2050, RSM's national leader agribusiness, Ross Paterson, said farmers were keen to be part of the solution, with the proviso that they don't necessarily see themselves as being a solution for other industries looking for agricultural land to be used to offset carbon emissions.

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Agricultural businesses also face increased pressure to meet compliance measures across a multitude of factors, including employment, production, distribution and more.

From a social standpoint, the rise of conscious consumerism has pushed the industry to invest more in ethical trade and labour arrangements.

Matthew Roesner, technical director of equipment manufacturer Roesner Pty Ltd, said the amount of reporting required of producers in recent years to demonstrate ethical trading and growing practices, has increased.

"This is also required on a more granular level, especially in the rise of consumers wanting to understand more about provenance and where their produce comes from," Mr Roesner said.

"This is only going to grow as the numbers of conscious consumers increase.

"While this adds another layer of complexity to production, it also presents a significant benefit for the agricultural industry.

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"By reporting on provenance, agricultural producers can help to engage more directly with consumers and to help educate the public on the agricultural industry and its practices."

Shane Kay, chief executive officer Moora Citrus, said it was essential for producers to engage dedicated compliance officers to help audit ethical trade and labour practices, especially as they continue to grow.

"From a labour perspective, this is absolutely essential for any producers that work with skilled seasonal or migrant workers," Mr Kay said.

"There are cases within the industry where seasonal workers have been taken advantage of or treated poorly in the past.

"While this is a problem in and of itself, the knock-on effects for the rest of the industry are significant, in that one instance of poor treatment could lead to a negative perception of the industry as a whole, further exacerbating the labour market challenges that already exist."

One of the challenges with ESG is how it impacts across a wider reach, EPASCO farms' farm manager Nick Ruddenklau points out.

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"Take live exports, for example," Mr Ruddenklau said.

"To stop live exports, we need to be able to process onshore, however the labour market challenge is such that it's difficult to staff existing abattoirs, let alone find the capacity to staff more abattoirs to help eliminate live exports.

"It's the foundational problems that must first be overcome to help ease obstacles in the future and in other areas of agribusiness."

Staff engagement surveys to measure job satisfaction levels and working hard to offer a more flexible workplace was "critical" to retaining staff, he said.

According to the report, the COVID-19 pandemic highlighted the agricultural sector's vulnerabilities, including availability of labour and access to markets, plus a need for increased research and development in fields that will help "to futureproof the sector".

While many agricultural producers already invest in advanced technologies, there is room for continued investment across the industry to help streamline systems and processes, letting producers work smarter and more efficiently to achieve greater yields, it said.

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Mr Oosthuizen agreed.

"There are very few farmers that don't already use controlled traffic across their properties and this has been made possible by advances in the technology in the equipment they use for production," he said.

"However, there are still steps to be taken to really harness the power of technology to achieve even greater production levels.

"For example, automation will become a more entrenched technology in the industry over the next five or 10 years.

"We've also started to see interest grow in the use of autonomous vehicles, which we expect to continue to increase over the coming years.

"To help support this, paddocks will need to be more clearly mapped out and digitally recorded and more cameras will need to be integrated with equipment to ensure obstructions don't get in the way.

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"In addition, we can already see a number of instances where two pieces of equipment can be steered and controlled by one worker concurrently, such as harvesters or tractors and a chaser and this is expected to increase within the next five to six years."

Mr Kay pointed out that as more producers and workers became involved with "agtech", further advancements can be made more quickly for direct benefit of the wider industry.

"We're one of three orchards currently involved in a national project with the University of New England (UNE) studying the use of remote sensing from fixed-wing aircraft and satellites to make crop forecasting more accurate, by predicting how many tonnes of produce will be harvested based on imagery," he said.

"By using a spectrum of sensors that monitor chlorophyll, temperature and other variables, we can monitor each individual tree in the crop and run algorithms across the collected data for an estimate of what production will be.

But with change comes a need for agricultural businesses to engage with the public to explain on their own terms what the changes will mean for workers, for consumers and for transparency in food production into the future, the report indicates.

Mr Ruddenklau summed up the need for engagement.

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"The discussion, education and awareness are lacking from the wider public conversation and this must change to help protect the future of agribusiness."

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