The cost of implementing these practices is one of the most common obstacles when it comes to sustainable agricultural transition.
Today, thanks to initiatives such as the Low Carbon Label, it is possible to finance the transition using carbon credits. These credits, generated upon completion of a project, represent a reduction of one ton of CO2 equivalent. These carbon credits can be purchased by stakeholders outside the food value chain.
In addition to purchasing carbon credits, stakeholders in the food and agriculture industry (FAI) can also pay a sector-specific premium to farmers. This payment is intended to recognize the efforts made by farmers.
However, the question that now arises is this: what are the objectives and challenges for all parties involved in accurately calculating the costs of practices related to low-carbon projects?
The cost of the transition for farmers
For farmers, the main challenge in calculating the costs of the transition is to obtain an accurate picture of the expenses involved. This assessment provides a solid foundation for making decisions and determining whether launching a low-carbon project is feasible.
By having a clear understanding of the costs associated with implementing low-carbon practices, farmers can assess the profitability of their projects. The ultimate goal is to minimize risks for farmers by preventing them from undertaking projects that are too ambitious to meet the set objectives.
The cost of practices for contributors
Accurately calculating the costs of the transition also ensures transparency when purchasing carbon credits. By funding low-carbon projects through the purchase of carbon credits, contributors demonstrate their commitment to acting transparently and responsibly. By understanding the actual costs of low-carbon projects, it is easier for sellers to justify the price of carbon credits to contributors.
French carbon credits are often criticized for being too expensive. However, by understanding the actual costs of the projects, the agents (who are responsible for selling the credits) can justify the price of the carbon credits to contributors.
The Cost of the Transition for the Food Industry
Because of their SBTi targets, food and agriculture companies can reduce their Scope 3 emissions by tracking the reductions achieved by actors in their supply chain.
Under pressure from consumers, food processors can adjust their specifications to include carbon performance criteria for the agricultural products they purchase.
To encourage farms to transition to a more sustainable agricultural model, agribusiness stakeholders can provide a sector-specific incentive.
The accurate calculation of the costs associated with these practices aims to objectively determine the amount of this premium and to provide an accurate picture of the cost of reducing Scope 3 emissions.
It is clear that there are many significant challenges facing the various stakeholders in the food value chain.
Having a precise estimate of the costs of low-carbon practices for each project helps align the interests of all stakeholders. For example, this can help prevent carbon credits from being priced too low or sector-specific incentives from being set at an excessively high level.
In addition to fostering alignment among all stakeholders, the cost of the transition plays a crucial role in the success of low-carbon projects by helping farmers make informed decisions and secure adequate financial support.
Low-carbon diets: a major challenge with numerous benefits
Sources
Low-Carbon Label, Field Crops Method https://www.ecologie.gouv.fr/sites/default/files/M%C3%A9thode%20LBC%20Grandes%20cultures.pdf
The Economic and Environmental Performance of Agroecology, https://www.strategie.gouv.fr/publications/performances-economiques-environnementales-de-lagroecologie
