COTTON growers are in a unique position to capitalise on income opportunities from the growing carbon market, according to environmental scientist Majella Mumford.

Dr Mumford, head of greenhouse gas assessments at Carbon Friendly, said growers needed to start looking at carbon as a potential “asset” for their business,  similar to land or a piece of machinery, that could create direct income or add value to their production.

She said as a key part of the textile supply chain, retailers and brands will look to growers as a means to reduce their carbon footprint and add credibility to sustainability claims.

In addressing a crowd of about 240 as part of the Bayer Cotton Grower of the Year field day, Dr Mumford said an increasing number of brands and retailers were signing up to voluntary schemes to certify climate claims.

An industry leader was the Science Based Targets Initiative (SBTi), backed by the United Nations Global Compact, the Climate Disclosure Project, and the World Wild Fund for Nature.

Over 8000 organisations have joined the program, including major Australian supermarket chains Coles and Woolworths, eastern Australian bulk handler GrainCorp, leading Australian chicken producers Inghams and Baiada, and Australia’s single-desk rice exporter, SunRice.

Dr Mumford said programs like SBTi provided a huge opportunity for growers, due to their provisions around where and how companies can use growers’ carbon insetting to create carbon credits.

Insetting can generate carbon credits when growers can document their operation is sequestering more carbon than it is emitting.

“The only option for [companies] to access carbon credits is by investing in their own supply chain,” Dr Mumford said.

“They are unable to purchase offsets from outside their supply chain, meaning that their farms are the only way for them to truly neutralise their emissions.”

She said the majority of a retailers’ emissions come from the supply chain (scope 3) rather than emissions from their actions (scope 1) or from the purchase of energy (scope 2).

She said, for example, only 10pc of Coles’ greenhouse gas emissions are scope 1 and 2.

“We think there is a potential for these carbon credits to actually demand a much higher price than those outside of the supply chain.”

Dr Mumford said retailers would need to work with growers either via purchasing carbon credits or investing in making on-farm practice changes to reduce emissions.

Mindset change

Dr Mumford said voluntary programs were one of many ways cotton growers could see financial returns from the carbon industry.

She said other methods included selling carbon credits through the Federal Government’s Australian Carbon Credit Unit Scheme, exploring new income streams from accessing new markets, and commanding higher prices through certification.

Dr Mumford said a common factor of all programs was that carbon credits were seen “as a material asset for farmers”.

She said some banking and financial institutions had also commenced recognising this asset class.

“Whether you bank your credits, sell your credits or inset your credits, they are always in your possession, and you own them.

“No one else has a right to them…so they are real assets.”

Proposed government mandates

In addition to providing possible financial returns, Dr Mumford said the government had proposed mandates for large-scale farming businesses to collect the data captured during the baselining and carbon-accounting process.

The proposed climate-related financial disclosures amendments under the Australian Securities and Investment Commission Act 2001 would require climate-related financial reporting by companies and registered schemes and superannuation entities.

Set to be introduced from July 1, the proposed changes would initially only impact companies with annual revenue over $500 million or assets worth over $1 billion.

However, this would be gradually expanded to include businesses earning over $50M, having more than $25M in assets, and/or over 100 staff.

“[Growers] need to get the credits flowing back into the system and pay for these practice changes,” Dr Mumford said.

“It is going to be mandated at some point, so take the opportunity to get paid for it as well.”

Small changes

Dr Mumford said agriculture, especially broadacre cotton and grain growers, could create dramatic changes to carbon emissions with very little behaviour changes.

“The dominant source of emissions on-farm is fertiliser use, which accounted for 50-52pc of emissions across all farms, followed by on-farm fuel use…which made up approximately 30pc of their total emissions.

“The good news is that it only requires a small increase in soil carbon to offset these emissions, in the realm of a 0.05pc increase in soil carbon.

“Obviously, broadacre cropping is across much larger areas than many an orchard, so you gain the benefit of having a larger area to manage a carbon sink.”

She said reducing reliance on fossil fuels, such as by investing in more efficient machinery, or substituting synthetic fertilisers for manures or biosolids could be “low-hanging fruit” for farm owners.

Dr Mumford said some practices could also bring other benefits such as, “enhancing soil structure, water holding capacity and buffering the soil against environmental changes”.

Baselining key

Dr Mumford urged growers to gather data on their operations before making changes to their business models.

“The carbon markets are not set up to reward farmers who were operating that way years ago.

“Set a baseline whether you plan to make practice changes in two or three years.

“It is drawing a line in the sand and getting a picture of where the emissions currently are and how close you may be to carbon neutral.”

She said the process was “largely a desktop activity for farmers” and involved correlating farm-input data such as fertiliser, chemical, fuel and electricity use as well as crop yields and land use changes.

She said growers could also conduct soil sampling to understand their “baseline soil carbon stocks”.

“This baseline is then used to track the impact of practice changes on soil carbon and calculate any farm sequestration.”

Cotton Australia held the 2023 Bayer Cotton Grower of the Year Field Day at Brookstead on March 20.

 

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