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‘Cooperatives hold key to greening agriculture’

June 19, 2024 - Jurphaas Lugtenburg

For the individual farmer, reducing greenhouse gas emissions is a huge challenge. If the European Union wants to achieve the goal of being climate neutral by 2050, we cannot ignore the agri-food complex according to Rabobank. Cooperatives can play a key role in greening the entire agricultural chain, the bank says.

Current initiatives to green agriculture are mainly focused on one crop and its subsequent chain. Research by the bank shows that brewers are leading the way. This is well explained by the researchers at Rabobank. A relatively large number of brewers have committed to the SBTi (a system including the UN and WWF to make climate goals measurable for companies) and the market consists of a relatively small number of major players. In addition, barley for brewing represents only a small part of the price of a bottle of beer that the consumer pays, unlike bread or pasta where the costs of wheat make up a much larger part of the price. Also, beer buyers are less sensitive to price increases according to Rabobank.

Total farm
Focusing on one crop or product group does not fit European agriculture. A European arable farmer often grows three to five different crops for crop rotation. If we want to make progress in sustainability, it must be done across the entire farm. Investing in sustainability is not quickly profitable for the farmer. Many products that farmers produce are ultimately seen by consumers as commodities that are interchangeable. This makes it difficult for farmers to demand higher prices. This is further reinforced by the market power that suppliers, processors, and retailers have over the highly fragmented primary producers. Farmers have the thinnest profit margins within the chain, and these narrow margins limit opportunities for sustainability.

Agricultural cooperatives can play an important role in sustainability. Unlike individual farmers, cooperatives have a strategic position in the chain. They can play a key role in distributing the costs of agricultural transition, and the risks and premiums among all stakeholders. According to Rabobank, only a small number of cooperatives are currently taking up this challenge.

Jurphaas Lugtenburg

Jurphaas Lugtenburg is a market specialist in onions, carrots, and commodities such as wheat, corn, and soybeans at DCA Market Intelligence. He combines his degree in business administration with a passion for farming.