The Wild Wild West of Carbon Markets: Where Do Swine Genetics Fit?
Although the swine industry isn’t chasing bandits and horse thieves, some allude to it feeling like living in the Wild Wild West when it comes to carbon credits and carbon markets.
“Producers are trying to figure out how they can monetize management practices on their farm through carbon markets,” says Chris Hostetler, director of animal science at the National Pork Board.
Here’s a look at how the industry is tracking greenhouse gas reductions in the pork supply chain. Could pork producers benefit in the future from the capture of carbon credits?
Put the Guardrails in Place
In October, PIC and the National Pork Board announced they are teaming up to develop a framework that will help demonstrate the valuable role genetics play in creating a more sustainable protein supply.
PIC conducted a life cycle assessment to quantify the sustainability benefits that can be achieved through the use of their genetic improvements, including those achieved through gene editing. The company recognized an opportunity for the entire industry to monetize genetic improvements because healthier, more robust pigs are more feed efficient and create less waste. PIC approached the National Pork Board about teaming up to develop this framework because it’s something all pork producers have a stake in.
“PIC recognized one of the things we needed to have in place are guardrails for being able to qualify genetic improvement for the different carbon markets that are out there,” Hostetler says. “The National Pork Board saw it as an opportunity to step in and fund a piece of it so even smaller genetic companies that perhaps don't have the wherewithal to do it from beginning to end, would at least have those rules in place for capturing the carbon credits for their genetically improved traits.”
The framework will help determine what needs to credibly be done and demonstrated in order for corporations to claim a genetic improvement as a greenhouse gas reduction.
“Part of the outcome of this project will be understanding what type of data needs to be tracked. How do we demonstrate that there's an intervention? When we talk about quantification, what are the requirements for quantification?” explains Banks Baker, director of new product marketing for PIC.
These are just a few of the things the team will be figuring out. The Context Network, a consulting group, will support the project and is help manage the life cycle assessment, which will be led by Dr. Greg Thoma with Resilience Services PLLC. Both Baker and Hostetler agree a framework will benefit the entire pork industry, including other genetics companies that can differentiate themselves as well.
“We are charged at the National Pork Board to work out ahead of the curve. We want to be doing those things that producers may not be thinking about this year, or maybe even next year. Certainly, within the next five years, producers are going to want answers to this. We can't scramble around and figure things out at that point, because it takes too long to get those answers,” Hostetler explains.
Profit for Pork Producers
Monetizing genetic improvements is likely an alternate revenue stream for producers down the road, but Hostetler points out they are in the very early stages of this process.
“If we don't participate now, we don't get the opportunity to set those rules,” Hostetler explains. “That's why it's important that we step up and do this now. Down the road, it may be harder to get genetic improvements certified as they relate to sustainability figures, particularly carbon credits.”
Producers and packers understand the efficiencies of genetic improvements. But Baker says the further away people get from hog production, the less likely they are to understand what those improvements mean.
“Being able to express this improvement in terms of environmental benefit puts it into a shared context and a shared value proposition that the downstream corporates can understand,” Baker says. “This isn't just an incremental reduction in production cost, or a general animal welfare improvement that maybe they can bolt on to, this is something that they are already trying to achieve.”
Data Drives Progress
One step the pork industry is already taking to help meet ambitious climate goals are On-Farm Sustainability Reports that help capture a baseline of where pork operations are today when it comes to achieving sustainability goals.
“I think that's the future when we start talking about sustainability,” Baker says. “We need data-oriented, data-driven reports, based on an outcome and not an opinion. We need to make sure those outcomes we report and talk about are credible.”
He says that is what makes the National Pork Board a great partner – they are the industry standard. PIC is interested in making sure as this program builds out, and becomes real, that it is scalable, defensible and credible.
“This is really an ambiguous space,” Baker says. “I think that's one of the reasons we're so excited because we need to have more standardized procedures that allow some of these claiming pathways to be identified and then codified. We see that as the strong outcome of this project – an industry standard that lays out all of the groundwork and minimum requirements needed for corporations to claim genetic improvements as greenhouse gas reductions in their supply chain.”
When you look at it from a business perspective, regardless of where you sit, removing carbon from production chains improves efficiency and profitability.
“Everybody gets to win,” Baker says. “We're able to create a new shared value, expressing the work that farmers are doing all the way back at the early production level that has impacts all the way to the pork sandwich sold at a restaurant.”
Change is needed, Baker adds, and it can’t be done to the detriment to a certain part of the production chain, or a certain part of the value chain.
“When we talk about the role that genetics plays in a sustainable food system, they're significant. And they start right at the beginning stages and start giving benefits to the farmer immediately,” Baker says. “Now, with this project of developing a framework that allows corporations to claim carbon credits, it allows producers to claim a piece of that improvement as well.”
How Will We Know It Works?
Hostetler says the life cycle assessment will be used to approach a carbon credit market to determine if they will accept the improvement as part of a lower carbon footprint, which then they can turn around and sell.
“Initially, we will do that in conjunction with a couple of farms that use 100% PIC genetics,” Hostetler says. “We're working out those exact details but then that would be a revenue stream then for those producers that are using those PIC genetics. Again, we want to do this so other genetics companies can do it as well to provide their clients that use their genetics an alternative revenue stream.”
It’s exciting because it ties genetics to sustainability, he adds. A larger, faster growing pig means better feed efficiency, better yield per carcass and ultimately, more profitability.
“It's something producers don't have to pay for. Genetics companies pay for it and pass savings on to their customers. And then, because we've done the groundwork to set up those guardrails and what's needed to get carbon credits, producers can enter those directly into the carbon market and begin selling carbon credits,” Hostetler points out.
He knows mistakes will be made along the way, but the industry needs to start somewhere.
“We want to be proactive working on the front end of setting those rules and be at the table on behalf of our producers who may not even be thinking about it yet,” he says.
Baker hopes the U.S. pork industry will be a model for other species, like beef and dairy, to follow.
“We’d like to see these types of programs expanded into other markets,” Baker says. “We’re starting discussions to see if we can push this to some other countries so that they can also claim value from genetic improvements they are delivering. Genetics prevent emissions instead of offsetting them, so it’s an easier thing to demonstrate.”
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