At a function in Sydney last week, the Red Meat Advisory Council presented the latest update to its Australian Beef Sustainability Framework.
The ASBF was launched two years ago, with stakeholders selecting six key priorities they would monitor progress on: animal husbandry techniques; profitability across the value chain; balance of tree and grass cover; antimicrobial stewardship; management of climate change risk; and health and safety of people in the industry.
This year’s second annual update showed good progress on those fronts, including that the industry is on track to meet its target of becoming carbon neutral by 2030.
And it’s surely positive the industry has made strides amid what has been a difficult year for Australian agriculture in general and the red meat industry in particular, with the floods in the north of the country devastating herds and leading to significant profit hits for Australian Agriculture Co and Terra Firma-owned Consolidated Pastoral Company, among others.
Community expectations around food sustainability and animal welfare were one of the main drivers for setting up the framework, with the need for the industry to get on the front foot in the face of increasing activism and potential for government to begin forcing regulation on the sector should clear progress not be demonstrated.
But another interesting driver to the framework centered around access to capital.
RMAC independent chairman Don Mackay is also chair of Sydney-based fund manager New Harvest Investment Management (as well as a former managing director AACo and general manager of Elders).
“A lot of customers want to know you have welfare and environmental standards, they want to know you’re paying your people properly and they want to know you’re audited – those things are a given before the door even opens [to new markets],” he said at the report launch in Sydney last week.
However, he made the point that these questions aren’t just being asked by customers, but by potential investors in Australian agribusinesses as well.
“They say, ‘If you want us to invest, these are the hurdles and expectations you have to achieve, and then you can have the money.’”
Mackay reiterated the point to Agri Investor afterward, saying it was vital for producers and investors alike to consider sustainability in the round, whether it is to secure access to a new market for their products or when raising more capital. The ASBF has been designed to frame the discussion, track progress and set targets to see where there is room for improvement.
Put simply, LPs and institutional investors are increasingly alive to reputational risk. And while agriculture is often viewed as a potential impact investment with positive effects for the environment – a good ESG investment, to put it another way – negative headlines around livestock farming, whether entirely fair or not, can threaten it.
The beef industry should be commended for trying to get on the front foot and put its case forward that red meat can be sustainable and good for consumers and investors alike.
As Mackay put it: “If we don’t do these things, in many cases it’s not a matter of how good the investment is – the door is just not open.”
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