Trucost Blog / 06 Sep 2011

Could carbon intensive food producers drive up their own input costs?

Despite the industry’s high carbon intensity and sensitivity to climate change impacts, Trucost data suggest that food producers are not improving their carbon performance.

The rising carbon intensity of food production could contribute to climate change impacts that are set to reduce agricultural productivity, with knock-on effects on food commodity prices.

An increase in the carbon intensity of food production could drive up greenhouse gas emissions that contribute to climate change, which is expected to negatively affect food production. A recent United Nations Environment Programme (UNEP) and International Water Management Institute (IWMI) study Ecosystems for water and food security warns that impacts such as land degradation and water scarcity could make crop yields up to 25% short of demand by 2050.

The Food and Agriculture Organization (FAO) has warned that more climate variability and change will challenge agriculture, fisheries and forestry to deliver the 70% increase in global food production needed to feed a growing world population by 2050. The FAO’s Profile for Climate Change predicts that food security in parts of Asia, sub-Sahara Africa and Latin America could be hardest hit by falls in agricultural productivity. This could have knock-on effects on the prices of commodities such as rice, wheat, and sugar, raising input costs across the food industry.

Data from Trucost’s environmental database of over 4,000 companies show that food production has the fifth-highest greenhouse gas intensity out of 45 sectors. It is the most carbon-intensive sector after electricity, water utilities, mining and forestry.

Despite the industry’s high carbon intensity and sensitivity to climate change impacts, Trucost data suggest that food producers are not improving their carbon performance. On average, some 20 companies analysed in the Farming & Fishing ICB subsector emitted more greenhouse gas emissions, measured in carbon dioxide equivalents, per US$ million revenue in 2010 than in 2009. The chart below shows the 6% rise in the average carbon intensity of food production in just one year. The carbon intensity of companies in the sector varied widely, indicating potential to improve performance.

More carbon efficient food production could help address risks from climate change. Using energy, water, land and nutrients more sustainably will be essential to limit impacts that drive food insecurity and price increases.

Chart 1: Carbon intensity of food productionCarbon intensity of food production

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