European market regulation, finance as key vehicles driving net zero shift

Some supply chains have begun setting objectives surrounding reducing emissions in their supply chain and when they do that, it impacts producers directly, according to Rabobank's head of client sustainability Crawford Taylor.

"Australian farmers compare relatively well to the rest of the world but the challenge going forward, if we sit in this same position, key markets could potentially pass us by," he said.

"While the industry might not have to be neutral, it has to make a contribution and it is needed to ensure market access."

Mr Taylor believed the world had made a big shift and key regulation in European markets were pushing the finance sector as a key vehicle to influence this transition.

"It is logical we are cooperative and the clients are, in essence, moving in the same direction to meet these issues we see ahead," he said.

He said once growers understood existing key levers within their business to address emissions, it would be seen as an opportunity, not as something to be afraid of.

"By doing the baseline measurement, producers are not losing anything. If we get over this fear, it can be incorporated into the business in an easy way because it is just a matter of looking at inputs and outputs," Mr Taylor said.

"Everything producers do to improve productivity, is linked to lowering emissions on-farm."

The big focus is also to stay productive and profitable, while also ticking environmental boxes and moving toward low carbon farming, according to Nutrien Ag Solutions sustainability field manager Todd Price.

"Carbon neutral messaging has been troublesome in the journey to educating producers about this space because it is near-on impossible for this to happen," he said.

"But, low carbon production is better messaging because it is much more attainable for producers. They have an option to lower emissions and maintain yield."

It was important for producers to not be fixated on potential numbers from a carbon audit, according to Mr Price.

"At this stage, we are not fixated on positive or a low number - it is about getting the number and going through the process to provide access to certain markets," he said.

"We are not trying to fearmonger producers about it but it is coming quicker than we think.

"Producers need to remember, it may not be an incentive which arises for them to do it, it may be a market access issue where an emissions profile is required."

Mr Price saw no risks to producers undertaking a carbon emissions profile.

"I really struggle to find any," he said.

"It is about best management practice, which farmers are doing anyway and if they continue down that line, it will result in favourable environmental numbers."

If producer trepidation surrounding carbon, low carbon and sustainability could be removed, they could be in good stead to take opportunities which are already being presented.

Grain accumulators were providing feedback to Mr Price about gaining regular access to lower carbon grain.

"We believe there is an overseas market which could pay a premium for it," he said.

"There are some challenges to scale that though and get as many growers ready as possible to take the opportunity, then verify it and follow that through the supply chain."

About 60 per cent of a grain farms carbon footprint is nitrogen fertiliser, with half of this footprint on-farm, according to SA Grain Industry Trust's chair Andy Barr.

But, Mr Barr believed Australia had responded heavily in the research and development sector, to address some of these key pillars of achieving future sustainability.

"There are three big urea projects happening in Australia to at least get urea produced on-shore and reduce urea miles. The projects are also looking at how to produce it in an energy efficient way, so there is light at the end of this tunnel," he said.

According to Mr Barr, restrictions of urea application in its raw form had already been implemented in Europe and these mandates were happening at a rapid pace.

"It needs an inhibitor on it and Canadian research trials have shown this is not economical for farmers. But, once the price comes down, it will become standard practice," he said.

Mr Barr said the Australian sugarcane industry had already implemented mandates surrounding urea application directly on the soil surface.

"So, these changes are something that are coming," he said.