The short term prospects for beef, pork and poultry in terms of both domestic and overseas sales look bright for all major producing countries as demand is outpacing supply – and will likely do so for years. One possible future constraint to grow, however, bears close monitoring.
Fueled by the August 9th Intergovernmental Panel on Climate Change (IPCC) AR6 report, livestock production is likely to become a target of policy makers worldwide. Whether one believes the report and in human induced climate change or not, the industry will be embroiled in policy changes which will impact production and possibly trade.
In the last 40 years of climate negotiations, scientists and policy makers have focused on carbon dioxide, the most abundant climate-warming gas. The IPPC for the first time has shifted their focus to methane-reduction as the planet’s best hope for staving off global warming.
“Countries must make strong, rapid and sustained reductions” in methane emissions in addition to slashing CO2 emissions the AR6 report states. The report has directed policy attention on livestock as well as oil and gas, landfills and fertilizer as major methane contributors to the atmosphere.
Methane emissions are reported to be responsible for around 30% of global warming since the pre-industrial era, according to the UN. The livestock industry will unlikely escape without mandated government constraints on production methods, measurement of methane emissions, public reporting and possible trade disruptions. Climate is no longer just a consumer concern. The Wall Street Journal has reported the U.S. Securities and Exchange Commission (SEC) is working on climate-disclosure regulations for public companies. High climate impact rates of a company could affect insurance rates, investor and lending decisions and the ability to bid on government contracts.
What to watch for: • The White House is expected to unveil methane regulations by September that are more stringent than rules issued by the Obama administration, which were rolled back under President Trump. SEC draft climate reporting regulations may be out by the end of 2021. • The EU is pursuing a carbon border adjustment mechanism that would tax imports from countries with weak carbon-reducing policies. Will methane now be included? The U.S. Congress has proposed similar carbon border duties for the U.S. imports. • Canada said it aims to “work with like-minded countries to consider how this approach could fit into a broad-er strategy to meet climate targets in a manner consistent with maintaining our competitiveness in a fair and open trading system”. • The EU is also proposing laws that will force oil and gas companies to monitor and report methane emissions and to repair any leaks. Will they add agriculture to the law?
The next major climate negotiations, known as COP26, scheduled to begin in Scotland on Nov. 1, will bring together representatives from over 190 countries. – Richard Fritz