Natural capital is the stock of renewable and non-renewable resources that provide goods and services to businesses, communities and the economy. In agriculture, natural capital includes soil, water resources, pasturelands and croplands, riparian areas, remnant native vegetation, agroforestry, environmental plantings and animals used in the production of goods and services. The extent of natural capital will influence the potential for productivity, profitability and sustainability of a farm business.
Natural capital is an emerging area gaining momentum as government policies, market demands, and corporate focus on Environmental, Social and Governance (ESG) performance drive more holistic valuation and accounting of nature-related risks and opportunities.
The Australian grains sector has the opportunity to proactively engage with natural capital reporting and measurement approaches. Growers must be central in the development of natural capital frameworks to ensure alignment with the unique characteristics and requirements of local production systems. This will position the sector favourably as it navigates evolving regulations and market trends that increasingly value biodiversity and healthy landscapes.
GRAINGROWERS SUPPORTS
- An enabling policy and market landscape that includes greater recognition of the wide-ranging public benefits provided by healthy agricultural ecosystems to generate buy-in throughout the supply chain and equitably distribute costs.
- Mechanisms that incentivise sustainable land management practices that aim to reduce reliance on prescriptive regulation by rewarding growers for stewardship of natural resources, rather than primarily focusing on recovery from disruptions.
- The voluntary engagement in natural capital markets to promote willingness to participate and long-term commitment to environmental stewardship over compliance-driven approaches.
- Frameworks that provide equitable benefits to all growers undertaking natural capital maintenance and improvements, recognising early leaders while incentivising continual improvement, to strengthen long-term sustainability across the sector.
- A coordinated National Natural Capital Framework to provide a consistent approach to align standards, provide clear guidance for growers and integrate state, national and international programs and reporting requirements to reduce complexity while facilitating uptake of sustainable practices that encourage management of natural capital assets.
GRAINGROWERS RECOGNISES
- The key role the Grains Sustainability Framework plays in enhancing industry’s sustainability efforts and ensuring the sector evolves to meet customers’ shifting needs and expectations over time.
- As a major landholder, natural capital is of vital importance to Australian agriculture.
- Grain growers must be central in discussions on developing standardised methods for measuring natural capital in Australian agricultural landscapes to ensure approaches are fit-for-purpose, accessible and interoperable.
- For international marketing purposes, consistency with international standards is important for natural capital accounting to be integrated into mainstream reporting globally. However, measures also need to be tailored to local conditions, so frameworks function effectively in Australia’s unique agricultural landscapes and policy context.
- Government policies and strategies must improve natural capital in the agricultural sector through sustainable land management practices, while also promoting growth of sustainable agribusinesses to enhance long-term productivity and profitability of the sector.
GRAINGROWERS SEEKS
- Research on robust measurement and valuation of natural capital and the private and public co-benefits derived from improving natural capital assets on farm.
- Measures to establish and build confidence in emerging natural capital markets, to provide certainty for growers interested in participating and to encourage private-sector investment.
- The development of further transparent market-based mechanisms to incentivise and reward sustainable land management practices.
- The creation of a transparent database to track the performance and history of intermediaries operating in natural capital markets, such as aggregators and brokers, to help ensure accountability and build trust among participating growers.
- Financial mechanisms that treat natural capital assets on par with other agricultural commodities, providing equitable tax treatment and incentives specifically for agricultural landholders, to avoid perverse outcomes that could arise from these incentives being exploited by non-agricultural entities.
- Grants to incentivise growers to make initial investments required to adopt practices that improve natural capital assets.
- RD&E investment to advance affordable, user-friendly AgTech solutions for measuring and reporting natural capital assets which integrate into existing farm management systems to avoid additional administrative burden.
- Sectoral guidelines aligned to a national framework to help growers conduct natural capital assessments, integrate findings into on-farm decision making, and report on natural capital in a standardised way.