The Growing Imperative for Western Australian Farmers to Reduce Net Emissions

The agricultural landscape in Western Australia is shifting. Farmers face increasing pressure from supply chain actors like supermarkets and fast-moving consumer goods (FMCG) companies to reduce on-farm emissions, categorised as Scope 3 emissions in corporate sustainability frameworks. As major retailers such as Coles and Woolworths commit to ambitious emissions reduction targets, their suppliers—including farmers—are asked to align with these goals to maintain market access. This shift represents both a challenge and an opportunity for WA farmers: those who act now to reduce their net emissions will secure a competitive advantage in a rapidly evolving marketplace.

Understanding Scope 3 Emissions and Their Impact on Farmers

Scope 3 emissions refer to the indirect emissions generated along a company’s entire value chain, including emissions from raw materials, transportation, and farming operations. For Coles, Scope 3 emissions comprise over 90% of their total. To address this, Coles aims to work with 75% of its suppliers by FY27 to set science-based targets for emissions reduction. Woolworths, meanwhile, has committed to a 19% reduction in Scope 3 emissions across its supplier base by 2030.

For WA farmers, this means that the emissions occurring on their farms are now under the spotlight. Retailers and FMCG companies are increasingly incorporating sustainability benchmarks into their supplier requirements, and those who fail to demonstrate progress in reducing emissions risk losing access to these key markets.

Offsetting vs. Insetting: Strategies to Lower Supply Chain Emissions

For retailers and FMCG companies, reducing Scope 3 emissions—those indirect emissions that occur across the entire supply chain—is essential to meeting sustainability goals. Since a large proportion of these emissions happen on-farm, these big companies must engage with agricultural partners and provide them with practical tools to reduce emissions. Companies can use two key strategies to lower these emissions: offsetting and insetting.

• Offsetting: This strategy allows us to compensate for emissions by investing in external carbon removal projects. These projects—such as soil carbon sequestration initiatives—create carbon credits companies can purchase to offset unavoidable emissions within their supply chain. While these efforts don’t directly reduce emissions on the farm, they enable companies to balance their overall carbon footprint by supporting projects that remove carbon from the atmosphere.

• Insetting: In contrast, insetting integrates emissions reductions directly into companies’ supply chains. This involves working closely with farmers to implement practices like reduction in chemical use, tree planting, improved grazing management, or regenerative agriculture. Insetting enables companies to reduce emissions at their source—on the farm—and improve the sustainability of the products they bring to market. These actions lower emissions and enhance soil health, increase productivity and build climate resilience for our agricultural partners.

By leveraging offsetting and insetting, companies can take a holistic approach to reducing emissions. Offsetting helps us manage residual emissions that are difficult to eliminate, while insetting ensures companies are working directly with their suppliers to reduce emissions intensity, improve sustainability, and secure premium market access. This dual strategy not only allows companies to meet their science-based targets but also strengthens the resilience of their supply chain, ensuring they remain competitive in a low-carbon economy.

The Business Case for Emissions Reduction in WA Agriculture

The Carbon Neutral Grains Pilot Project, a collaboration between the CBH Group, Wide Open Agriculture, and DPIRD, provides insights into the emissions footprint of WA’s grain industry. The study found that fertiliser use and crop residues significantly contribute to Greenhouse Gas emissions despite WA grain growers performing better than national baselines in emissions efficiency. As consumer and corporate demands for low-emission products increase, WA farmers will be increasingly encouraged to adopt standardised measurement tools like the Grains-GAF calculator to accurately track and report their emissions.

Reducing emissions is not only about doing the right thing environmentally—it is also essential for business viability. Coles' work with beef farmers demonstrates how collaboration within the supply chain can benefit farmers through reduced input costs and improved productivity. By integrating emissions-reduction strategies into farm operations, farmers meet corporate requirements and improve their profitability and resilience.

Unlocking Market Access and Future Opportunities

Global trends show that FMCG giants like Amazon, Microsoft, and PepsiCo invest heavily in carbon removal solutions. Domestically, Coles supports beef farmers through initiatives like the methane-reducing supplement Bovaer® and tree planting programs to enhance carbon sequestration. These efforts highlight the growing role of agriculture in corporate decarbonisation strategies.

Farmers who adopt insetting strategies and actively engage with carbon markets through offsetting will position themselves as preferred suppliers to major retailers and processors. In addition to market access, they will benefit from premium contracts, lower input costs, and improved farm resilience. Conversely, farmers who delay action may struggle to meet new supplier standards, risking exclusion from these critical markets.

Collaboration is Key to Success

Navigating the complexities of carbon accounting and emissions reduction will require collaboration across the supply chain. Farmers must work closely with agronomists, researchers, and financial institutions to develop and implement effective strategies. Projects like the Carbon Neutral Grains Pilot underscore the importance of industry-wide cooperation in achieving sustainability goals.

At the same time, partners such as soil carbon farming project developer Carbon Sync are ready to support farmers by providing technical expertise, carbon accounting tools, and market access for carbon credits. These partnerships will enable WA farmers to reduce emissions, capture carbon, and enhance their sustainability credentials.

The Path Forward for WA Farmers

The time for action is now. As Coles, Woolworths, and other major companies align their supply chains with emissions reduction goals, WA farmers have a clear opportunity to stay ahead of the curve. Farmers can future-proof their operations and build more resilient, profitable businesses by embracing soil carbon sequestration, adopting insetting practices, and participating in carbon markets.

Reducing net emissions is not just about meeting regulatory or corporate requirements—it’s about ensuring the long-term viability of WA’s agricultural industry. With market access, financial incentives, and environmental stewardship on the line, farmers who act decisively will position themselves as leaders in sustainable agriculture, creating lasting benefits for their businesses, communities, and the planet.

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