Chain of events: a blog of Food Chain Intelligence

According to the Carbon Disclosure Project (CDP), there are three types of GHG emissions businesses have to account for:

Scope 1 emissions. These are direct emissions from sources owned or controlled by the reporting organisation.

Scope 2 emissions. These are emissions that physically occur outside the organisation’s reporting boundary and are therefore ‘indirect’ emissions. Examples include electricity, heat, cooling or steam production.

Scope 3 emissions. An organisation’s indirect emissions other than those covered in Scope 2. They are from sources that are not owned or controlled by an organisation, but which occur as a result of its activities. Emissions considered by the CDP Supply Chain Information Request are produced by business travel, distribution and logistics, use and disposal of a company’s products, and other supply chain emissions.

For many companies working in food supply chains, Scope 3 activities are normally the largest component of their carbon footprint. For example, Wal-Mart estimates that their Scope 3 emissions are at least 100 times greater than their total Scope 1 and 2 emissions (Wal-Mart Stores, 2009); Woolworths estimates that about 96.5% of its annual emissions are created by their suppliers (PricewaterhouseCoopers, 2009).

This is further illustrated in the following bubble chart, which shows the relationship between 2009 annual revenues (in US$ billion), the sum of Scope 1 + 2 emissions, and Scope 3 emissions of 15 companies involved in food manufacturing/ marketing/ transport. The size of the bubble represents the magnitude of Scope 3 emissions. . The cumulative annual carbon footprint of the 13 food retailers and manufacturers represented in this sample -that is, excluding Maersk numbers- was 245 Mt CO2-e, of which Scope 3 emissions represent 86% of this total. In six of these companies, Scope 3 emissions outweigh Scope 1+2 emissions. If we take Unilever as an example, Scope 3 emissions are forty times larger than the sum of 1 & 2 emissions.

The problem is: not many companies know the magnitude of their Scope 3 emissions. Only 18 from a sample of 36 companies involved in food supply chains declared Scope 3 emissions in the CDP report of 2009. Further, some disclosures indicate significant gaps of information in their declaration of Scope 3 emissions. For instance, Wal-Mart did not disclose the contribution of distribution and logistics undertaken by 3PLs.

A key difference between Scope 1, 2 and 3 data is that the latter information relies on suppliers (e.g. raw materials, transport, packaging) sharing data with their buyers. Remember our previous papers and posts discussing the importance of transparency in the supply chain? The disclosure of Scope 3 activities is considered sensitive information, as data disclosed can be converted into financial indicators, just in the same way that financial values can be converted into GHG emissions, through a financial hybrid lifecycle analysis. Therefore, trust and transparency between food supply chain players are essential to assess Scope 3 emissions in an accurate manner.

The Australian Government’s Enhanced Project By-law Scheme (EPBS) provides access to tariff duty concessions for eligible capital goods, for Australian companies undertaking projects in the agriculture, food processing and food packaging industries.

Elegible capital equipment that has been covered in the past includes specialist irrigation and fogging systems, climate control fans, processing lines and bottling lines.

The following criteria for elegibility applies:
-projects fall within the agriculture, food processing, or food packaging industries.
-capital goods expenditure threshold of $A10 million or more.
-demonstrate that goods fall within those permitted under the EPBS Policy and Administrative Guidelines.
-demonstrate that goods are not produced in Australia or that they are technologically more advanced, more efficient or more productive than all goods currently available from Australian production
-develop and implement an approved Australian Industry Participation plan which provides Australian industry full, fair and reasonable opportunity to participate in all aspects of the project.

For further details, contact the AusIndustry Hotline on 13 28 46, or email hotline@ausindustry.gov.au.

The report “A Sustainable Global Society” summarises the views of thirty top materials chemists from five countries assembled in London to identify the scientific research required to address key global challenges, and to provide recommendations to policy makers. The report also presents an international view on how materials chemistry can contribute positively to creating a sustainable world.

One of the issues discussed is the decreasing supplies of phosphorus, a key element of fertilisers used to produce a wide range of crops.

The authors of this report state that decreasing world supplies of elemental resources is a fact and that this trend is potentially more pressing than the decreasing supply of oil. For example, phosphate reserves will be depleted in 30-100 years. Manure is a source of phosphate and phosphorus is present in soils, rivers and oceans. Excess phosphorus is also found in fertiliser run-offs. However, no viable method for recovery has been designed yet and phosphate rock remains as the most widely used resource for phosphate.

There is hope in the development of new technologies, based on fundamental understanding of how phosphate can bind to new materials and how this captured resource can be separated through membrane filtration or similar technologies.

Key factors to make this happen?

1) International cooperation in larger issues such as these, that threaten directly the world’s food supplies.
2) Support in the form of R&D investment, both public and private.
3) Give young people considering chemistry as a career reasons to stick to this decision and not choose other options because they will earn more money elsewhere.

Gerard McEvilly, from Horticulture Supply Chain Services, has compiled a directory of horticulture courses which addresses the difficulty that students face when they search for a horticulture course in Australia. Gerard observed that many of these courses are often difficult to find because they are ‘buried’ among many other subjects in university brochures and websites.

The directory covers university, TAFE and courses offered by private companies. The publication also has inspiring stories about careers in horticulture and pointers to students that want to pursue these careers.

Gerard is seeking feedback about the contents of the directory via an online survey and he would really appreciate if you can spare the time to voice your opinions. The survey can be found here:

http://www.surveymonkey.com/s/CTNJQRH

Looking for updates in the status of the review of RIRDCs, I came across this document:
www.pc.gov.au/__data/assets/word_doc/0015/106422/rural-research.doc

What makes this document of interest is that the author is not well defined in the document, but reading the first page it is clear that this is the position of the Productivity Commission.

I was surprised at some criticisms made in this document to the draft of the PC council (available here). Some of these are:

-The PC states that the Draft over-emphases the contribution of R&D to the rural sector’s performance.

The Council’s draft plan goes too far in the central planning direction. Examples include:
• specification of how the overall rural R&D investment portfolio should be delineated on a share of spending basis between ‘transformational investment’, ‘near term adjustment’, ‘capacity building in people’ and ‘international links’
• the nomination of various specific ‘winner’ activities in which the Australian Government should invest or focus its policy settings on, such as R&D related to bio-based production
• the concern to bring the whole ‘paddock to plate’ value chain within the planning net. The case for including downstream activities in the sort of directive R&D plan envisaged by the Council is weak. Other than provide generally available R&D tax incentives, there would be few if any upsides to set against the inevitable risks and costs that would come with this sort of government involvement.

The PC does not support government involvement in rural R&D. The document states: “the Council appears to have unquestioningly accepted the food security catchcry that has come to dominate discussions on future rural R&D policy. However, the many challenges that the rural sector will face in coming years are not of themselves a reason for government to take the lead role. In fact, as most sectors in the economy will face significant challenges — including from climate change, an ageing workforce, and intensified global competition — reliance on this ‘rationale’ would require government to take charge of investment decisions across a wide sweep of economic activity.”

The PC argues that food security is not in itself a reason for a government to be involved on domestic rural R&D and that the prospects of Australian food supplies ‘running out’ appear remote. No analysis of data was presented to support this case or indeed, in the entire critique, yet the PC finds the Draft lacking in analysis (!?).

I was surprised because I thought that the Draft from the Council contained already bad news for rural R&D. But the PC is essentially suggesting that the draft is not tough enough!

Further, the PC observations fly in the face of the report “Australia and Food Security in a Changing World”, produced by the Prime Minister’s Science, Engineering and Innovation Council (PMSEIC) . This report states that a national and coordinated approach to food is needed. This includes not only the supply chain partners (i.e. farmers, manufacturers, retailers and service providers). It also includes policy makers, regulatory agencies and research organisations.

Key recommendations out of the report:

a) The establishment of an Australian Food Security Agency, which coordinates the development and implementation of
policies and programs targeted to improving Australia’s food security.

b) Australia should increase its investment in agricultural R&D, to harness national expertise and take a leading role in national and international programs targeted to improving low input farming systems.

c) Development of incentives to recruit and nurture future generations of innovative and adaptive farmers, researchers and associated professionals for the Australian food production and processing sectors.

d) Improve engagement with the community and partner organisations to elevate the status of food in Australia and build cooperative commitment to an improved food value chain.

Unfortunately, the well presented, well thought argument of the team headed by Dr Penny Sackett (who has left now her position as Chief Scientist) has no chances to succeed against a clear drive by the PC to decrease R&D funding. The “tough budget” already promised will make sure of that.