Crispin Dye, our Venture Analyst, attended the NZAGRC New Zealand Agricultural Climate Change Conference on 28 February. The two-day conference covered the latest policy, science and implementation actions being undertaken to reduce agricultural greenhouse gases in New Zealand. He shares his key takeaways in our latest blog.
The key message from the Agricultural Climate Change Conference was clear - the pressure to lower emissions in the agricultural sector is shifting and New Zealand's food supply chain members need to act. That shift; is a move from being primarily regulatory-driven towards being market-driven.
Regulatory pressure on food producers is still very much prevalent (and the 2030 checkpoint of many emissions reductions commitments is growing ever closer) but food buyers (manufacturers/processors/retailers) are increasingly looking to source low-emissions products, both in response to changing consumer preferences and as a means of meeting their own climate commitments.
Increasing consumer understanding of the climate impact of the food supply chain is putting pressure on food brands and retailers to shift their offerings towards lower emissions profiles. A ‘prime’ example of a market demand shift is Silver Fern Farms Net Carbon Zero Angus Beef. As consumer awareness grows, a low emissions profile will shift from being a ‘nice-to-have’ value add to being a ‘must-have’ for premium products in developed markets.
This pressure from consumers and therefore buyers are resulting in food producers having to reduce their emissions profiles transparently and provably. From a New Zealand angle, the importance of lowering emissions throughout the food supply chain is particularly prevalent as local food exporters look to maintain the premium, high-value, status of their produce. For the buyer, the key metric which requires measuring is the number of emissions per unit of product, thus it is in this way that technology will be judged for effectiveness.
From an agritech investment perspective, this represents an opportunity for technologies that facilitate and validate emissions reductions.
Farmers (and corporates) are much more responsive to market signals than regulatory signals, and we can expect to see these groups increasingly seek out tech solutions to help them meet the requirements put to them by buyers (and indirectly by consumers). It was noted by sheep/beef farmers that the historic strategy of reducing emissions per unit by increasing production is reaching a point of diminishing returns, further incentivising the adoption of disruptive technology. As always, any solution must improve or at the very least have no negative impact on production.
On the buyer side (i.e. manufacturers/processors/retailers), the rise in ‘conscious consumerism’ will drive the adoption of technology that tracks, measures, and validates carbon footprints across the supply chain. A NZ company already attempting to help retailers reduce GHG emissions at the consumer end is Foodprint.
The vast majority of large food brands are looking to tell a climate-positive story in some way but public awareness of ‘greenwashing’ is at an all-time high. This incentivises these companies to have absolute clarity on emissions throughout their supply chains and this in turn will result in pressure on upstream players to adopt tech that can facilitate this.
Increased public scrutiny on emissions profiles within the food value chain is creating significant opportunities for the adoption of novel technologies that can reduce, track, and validate emissions. This global opportunity is particularly relevant in Aotearoa New Zealand as food and ingredient exporters will seek to maintain access to high-value, premium product markets.
This creates a prime opportunity for NZ agritech companies and entrepreneurs to leverage this local demand to build traction as they look to scale globally.