‘Deforestation-free’ beef: A new era for the Australian food & agribusiness industry
‘Deforestation-free’ beef: A new era for the Australian food & agribusiness industry
The global appetite for beef has steadily risen over the decades, driven by factors such as increasing affluence and urbanisation. However, this growing demand has placed a considerable strain on the environment, with deforestation being a particularly pressing concern. The push for deforestation-free beef is gaining momentum, especially with growing demand from markets that prioritise sustainable sourcing.
Market access conditions are undergoing fundamental change in the food and agribusiness industry in Australia. While customer demand grows, regulators globally are implementing regimes to ensure production practices are sustainable and do not contribute to deforestation. While much of the current focus has been on beef production, it is expected that ‘deforestation-free’ requirements will progressively span across a wider range of commodities, including paper, pulp and timber, palm oil, cocoa and soy. This move signifies a step towards more sustainable sourcing practices across the industry.
The push for deforestation-free products, particularly beef, is gaining momentum, but implementing this change is proving challenging for some organisations due to a number of issues.
The market context
A major Australian supermarket chain has recently announced its commitment to selling only deforestation-free beef products by the end of 2025. This initiative was announced as part of its broader sustainability strategy, which has seen the organisation update their sustainability targets, shifting from an existing net-zero deforestation goal to becoming deforestation-free by December 2025.
This policy will not be limited to just beef products in their supply chain but will also include a range of other commodities, including paper, pulp and timber, palm oil, cocoa and soy. We predict that more organisations will follow suit and include similar initiatives and measures as part of their broader sustainability strategies.
While this initiative is the first of its kind within the Australian supermarket industry, it is not new globally. Large organisations such as McDonalds have introduced their own deforestation-free beef procurement policy as part of their broader sustainability commitments. The European Union Deforestation Regulation (EUDR), scheduled to commence on 30 December 2024, also establishes rules that importers will need to ensure the product has not contributed to deforestation or forest degradation.
What is the difference between net-zero deforestation and deforestation-free supply chains?
A common misconception is that net-zero deforestation and deforestation-free commitments are the same. In fact, these two strategies are quite different and can impact an organisation’s supply chain in a number of different ways.
Net-zero deforestation supply chains
A commitment to net-zero deforestation means an organisation aims to balance deforestation by ensuring that for every area of forest degraded, an equivalent area would be replanted or restored. As part of this strategy, an organisation is committing to ensuring there is no overall reduction in forest coverage through its supply chain activities.
Deforestation-free supply chains
A deforestation-free commitment is a much stricter standard than a net-zero deforestation commitment. In this situation, an organisation is committing to no forests being degraded at all as part of their supply chain. This means ensuring that none of the products that an organisation sources contribute to deforestation in any way. This move reflects a much stronger stance on protecting forests and biodiversity.
Defining ‘deforestation’ and the role of certification schemes in Australia
A lack of a clear definition that adequately considers the Australian context has created some ambiguity and uncertainty for the food and agribusiness industry here. Concerns also exist that the EUDR does not adequately consider Australia’s unique landscape and historical land management practices.
Industry group Cattle Australia is currently in the process of engaging with the industry to develop a practical definition of deforestation tailored for Australia, which considers Australia’s historical land management practices. Initiatives such as the Australian Beef Sustainability Framework and the Global Roundtable for Sustainable Beef (GRSB) are also working to develop credible schemes that can help producers demonstrate their commitment to sustainability.
A single agreed-upon Australian definition of the term deforestation is crucial to align conversations between producers, suppliers and customers and give certainty to investment decisions. Further, to retain access to international markets, Australian producers and suppliers must be able to practically satisfy definitions of deforestation in the EU and elsewhere.
Certification schemes establishing a transparent supply chain will be essential for verifying the deforestation-free status of beef, tracking the beef from the farm to the consumer and ensuring that all suppliers and intermediaries are committed to sustainable practices.
Economic viability
The transition to deforestation-free beef production often involves significant upfront costs. These can include:
- Investments in technology: Implementing new technologies, such as satellite monitoring systems for verifying land use and pasture management practices, can be expensive.
- Certification fees: Obtaining certification from recognised bodies like Certified Sustainable Beef (CSB) involves ongoing fees and audits.
- Changes in production practices: Adopting sustainable land management practices, such as rotational grazing and pasture improvement, may require investments in new equipment, fencing, and additional labour.
- Increased input costs: Sourcing sustainable feed ingredients and complying with stricter environmental regulations can lead to higher input costs.
A market premium for deforestation-free beef may not be immediately available to offset these increased costs, particularly in the early stages of the transition. These economic pressures can be particularly challenging for small to medium-sized farms, which may lack the financial resources to adapt quickly.
Due diligence requirements
It is anticipated that the obligation to provide information to satisfy due diligence will rest with the producer and/or supplier. The EUDR provides a template for the information required as evidence that production is not associated with deforestation.
While it is not clear what information will be required to satisfy domestic customers, EU authorities will require information relevant to land management practices for beef and cattle consignments, including:
- Geolocation of all plots of land producing commodities containing relevant products
- The geolocation of the establishments that kept cattle
- Date or time range of production
- Evidence that the commodities were legally produced
- Adequately conclusive and verifiable information that the relevant products are deforestation-free
- Details of the entire supply chain from beginning to end.
The path forward
The transition to deforestation-free beef production presents both challenges and opportunities for Australian beef producers. While access to domestic and EU markets and the associated regulatory requirements pose significant hurdles, there is also a clear path toward sustainable practices that can enhance both environmental and economic resilience.
To address the economic challenges, Australian beef producers may consider:
- Diversifying income streams: Exploring additional revenue sources, such as cattle breeding, tourism, or carbon credits, to help offset the costs of sustainable production.
- Improving efficiency: Implementing measures to improve production efficiency and reduce costs, such as optimising feed rations and improving herd health.
- Collaborating with industry partners: Collaborating with other producers, suppliers, and retailers to share knowledge and resources and negotiate better deals for sustainable inputs.
- Accessing government support: Seeking government assistance, such as grants, subsidies, or loans, to help finance the transition to deforestation-free practices.
By carefully considering strategies to mitigate the associated costs, Australian beef producers can make the transition to deforestation-free production more economically viable and sustainable.
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