Written by: Dr. Martin Gooch, CEO of VCM International | June 2022
One of the greatest challenges facing the food industry is how to decouple carbon emissions from productivity without negatively impacting economic performance. To ensure that producers/vendors do not become price takers, by making commitments that end up providing greater benefits to powerful corporations who do not have their best interests at heart, businesses operating in Ontario’s horticultural industry must position themselves for the future.
Historically, the primary focus of supplier/buyer interactions has been product standards, service levels, and cost reduction. Driven by legislation, along with investors’ and consumers’ expectations, environmental performance is rapidly becoming an equally (if not more) important determinant of supplier/buyer interactions. This is because the ability to meet the majority of carbon reduction commitments being announced by retailers and other food corporations lies with their vendors, not with the corporations themselves.
Retailers and food service operators will therefore be seeking to partner with vendors who can verify that they are low-carbon emitters, either through formal and expensive certification schemes, or inexpensive trust-based assurances. The latter includes retailers’ sourcing eco-claims and private label initiatives. As well, in all likelihood, at some point retailers will begin replacing “over and above” payments with a carbon offset requirement, or add the providing of carbon offsets to current trading practices. In such circumstances, low-carbon emitters, and producers who can validate that their farming practices sequest carbon, would gain the most.
As discussed at the “Navigating the Carbon Landscape of Tomorrow” panel held at OPMA’s 2022 AGM in Niagara on the Lake, the produce industry can also monetize carbon initiatives by connecting with consumers in ways that resonate with them, potentially leading to increased sales and/or margins. The most effective point to meaningfully connect with consumers in ways that translate into purchasing decisions is at the point of sale, in the retail store.
With many consumers being unaware of strident innovations being made by Ontario’s horticultural industry (such as the locality of greenhouse production that is world leading in its carbon reduction efforts), collaborating with retailers and foodservice operators to inform consumers of your environmental initiatives is key. Waste reduction efforts, packaging modifications, innovative production (such as vertical/indoor farming, or continual improvement (lean) management systems), are also examples of opportunities to capture market value. All speak to the importance of consumer-centric buyer/supplier relationships.
For deeper insights on how the fruit and vegetable industry can profit from low-carbon and carbon sequestration innovation, and pitfalls to avoid, see VCMI’s report titled “Profiting From Low Carbon Food Production.” Visit VCM International's website for more information.
To read VCMI's latest paper on how the food industry can profit from low carbon food production, click here.