It’s over 100 years since Sir Horace Plunkett first set in train the Irish co-operative movement yet its impact is still clearly visible when we look at Ireland’s agriculture sector today. Although co-operatives never really succeeded in meat processing, Ireland’s modern dairy industry is dominated by farmer-owned co-ops that have grown into major export businesses today, shipping dairy ingredients and commodities all over the world.
Indeed, a number of Irish dairy co-ops have evolved over time into major multinationals with processing footprints all over the world. Glanbia has grown to become the largest cheese producer in the US, while Kerry Group is arguably Ireland’s most successful homegrown multinational giant, with almost 150 manufacturing plants globally.
Regardless of global scale, the primary aim of the co-op movement in Irish agriculture was to give farmers a better chance of achieving a fair price from the market by processing and marketing their own produce.
And over the course of the last century, Ireland’s dairy sector has organised itself into a farmer-owned industry with well-invested assets and processing capacity, routes to markets all over the world and even its own €1bn consumer brand in Kerrygold.
It may not be obvious right now, but Irish farmers would be well served if they were to organise themselves together one more time and establish a new co-op to serve them for the next century to come.
Irish agriculture is moving into a crucial period in history that will have major implications for farmers in the decades ahead. And I’m not talking about Brexit or COVID-19.
Without doubt, climate change and the sustainability agenda is now the greatest challenge facing Irish farmers. Yet for all its challenges there is an undoubted opportunity for farmers in tackling climate change head-on. While many in the agriculture sector are rightly worried about meeting emissions targets up to 2030 and 2050, a mindset change is required in the industry to see the true potential of carbon.
While there will always be some form of emissions linked to food production (no matter what form it takes), agriculture remains the only sector with the ability to actually capture carbon out of the atmosphere and lock it away in soils, trees, hedgerows and forests.
Farmers need to refocus on this unique ability of their land at a time when the price of carbon is only set to travel in one direction over the coming decades.
In Ireland, the Government increased the price of carbon to €33.50/t this year and it is set to continue to raise the price of carbon every year for the next decade until it hits €100/t by 2030. Yet many believe this is a conservative price pathway for carbon, with some analysts forecasting that carbon could reach highs of €400/t to €500/t over the coming decades as the need for decarbonisation accelerates.
However, the obvious problem facing farming right now is that carbon sequestration on Irish farms is given no credit by the EPA or other regulatory authorities as they have no way of verifying how much carbon is captured on farms every year.
And this is where a new farmer co-op comes in. A ‘carbon co-op’ if you will. The original co-ops established by farmers raised funds to invest in stainless steel and processing capacity, allowing farmers to process and market their own produce for the first time.
However, if farmers invested to establish a carbon co-op, this entity would not need to spend money on stainless steel or physical assets. Instead, it would invest in technology like LIDAR mapping and GPS soil carbon analysis to measure and monitor carbon sequestration levels on the farms of each farmer who invests as a shareholder in the co-op.
The one thing about carbon sequestration is that, although we know it occurs in our grasslands and hedgerows, it is difficult and expensive to measure accurately. The Government, Teagasc or the EPA do not have the resources needed to carry out large-scale measuring of carbon sequestration all across Ireland.
Instead, farmers would be better served by taking this challenge into their own hands via a new carbon co-op and invest in the technology to measure carbon sequestration on their own farms. Once it is done in a verifiable manner, the EPA has already indicated it will include these carbon sequestration figures in its annual calculations for emissions and sequestration that it is required to report to the UN’s climate change body, the IPCC, every year.
How much will it cost?
Based on the total agricultural area in Ireland, which stands at 4.4m hectares including grasslands and tillage land, the capital investment required by a new carbon co-op to begin accurately measuring and monitoring carbon sequestration in the soils, hedges and trees on all Irish farms throughout the country is just over €430m. This assumes a cost of circa €100/ha for LIDAR mapping and GPS soil carbon analysis.
This is clearly a very significant sum of money but once this initial capital investment is made up-front to create the carbon sequestration baseline, the cost of monitoring sequestration reduces considerably.
How could it be funded?
The cost of membership to the new carbon co-op would be based on the amount of land farmed by each farmer. A membership entry fee of €100/ha would mean each farmer would fund the cost of the initial carbon mapping process.
If 50,000 Irish farmers with an average farm size of 43ha (Teagasc farm survey) invested to join this new carbon co-op it would raise almost €220m in capital (i.e. a farmer with 50ha of land would need to invest €5,000 to join the co-op).
As more farmers join, the entry fee will cover the cost of the carbon mapping process for their individual farm.
But how can farmers make money from carbon?
Although we can’t scientifically show it yet, it is likely that there is more carbon captured out of the atmosphere than there are emissions from many Irish beef and sheep farms due to the low intensity of these systems.
Theoretically, the excess carbon captured every year by these farms could be bundled as carbon credits with a market value, which is increasing all the time as the price of carbon rises. The EU has a complex carbon trading scheme known as its emissions trading scheme, or ETS.
Is it too far a stretch of the imagination to see a carbon co-op with a large amount of carbon credits to trade being allowed access to the ETS market? If these carbon credits from low-intensity farms could be sold it would also have the benefit of creating a new (and potentially very lucrative) market incentive for farmers to improve soil health and plant extra trees and hedges in order to capture more carbon every year.
Many commentators talk about the need for diversification in Irish agriculture away from dairy but have yet to put forward a credible alternative to the attractive incomes from dairy farming. Allowing less intensive farmers to sell carbon credits might actually be the way to bring about credible farm diversification, which would also clearly benefit the environment.
For full-time farmers with higher stocking rates, mapping carbon sequestration accurately would provide them with a true picture of their carbon footprint for the first time. And just like the research farms at Dowth and Shinagh, this would set these production-focussed farmers on the road towards carbon neutrality over time by making interventions to offset the emissions of their livestock.
What other benefits are there?
The other major opportunity from establishing a carbon co-op is the marketing potential of owning the data that verifies meat and dairy from a carbon neutral farm. The secondary result of investing in carbon mapping technology is that you can use it to tell consumers the produce from that farm is ‘verified carbon-neutral’.
Outside of the success of Kerrygold, Irish farmers have really struggled to extract premiums for Irish meat and dairy that is clearly produced in a vastly different system to most international competitors.
However, a new carbon co-op could be first to market with a ‘verified carbon-neutral’ brand for Irish meat or dairy from its supplier farms. The co-op could license this brand to customers large and small – almost like an ‘Intel Inside’ brand for Irish food.
For the first time, this would create a clear point of difference for Irish meat and dairy products and allow farmers to charge a premium for using a ‘verified carbon-neutral’ label. How valuable would such a label be to a large brand like McDonald’s, Burger King or Danone if they could source ingredients that were ‘verified carbon-neutral’?
While many in the industry see climate change as a threat to Irish agriculture, it is equally possible to view the growing need to cut emissions as an opportunity for the sector. After all, the EU has already made it clear that carbon capture by EU farmers will be central to meeting its target of being carbon neutral by 2050.
By organising themselves to establish a new carbon co-op, there is no reason why farmers can not only meet their climate obligations but can also benefit economically from investing in climate action. All that’s needed is a tweak in mindset.
Uber is the world’s largest taxi company but it owns no cars, Facebook is the world’s largest media company but it creates no content, AirBnb is the world’s largest accommodation provider but it owns no property and Ali Baba is the world’s largest retailer but it owns no stock.
What’s to stop Irish farmers from building a new farmer co-op even though it will process no meat or milk?
Change is coming whether we like it or not. Sir Horace Plunkett isn’t around today to help build a new chapter in the Irish co-op movement.
Instead, it falls on today’s leaders in the agri-food sector to take the bold steps needed to support Irish family farming for the next 100 years.