Sustainability claims for international markets

25th February 2025

Department of Agriculture Forestry and Fisheries
GPO Box 858
Canberra City ACT 2601

Email: credentials.innovation@aff.gov.au

Dear Sir/Madam

RE: Assuring agricultural sustainability claims: discussion paper

GTA welcomes the opportunity to comment on the Assuring Sustainability Claims discussion paper
(Discussion Paper) and support the government to build its research knowledge and understanding of international market requirements for proof of sustainability claims.

1. About Grain Trade Australia

Grain Trade Australia (GTA) is a national member association and is the focal point for the commercial grain industry within Australia.

The role of GTA is to provide a framework across industry to facilitate and promote the trade of grain.
GTA facilitates trade and works to provide an efficient, equitable and open trading environment by providing leadership, advocacy, and commercial support services to the Australian grain value chain.
GTA Members represent over 95% of all grain storage and freight movements made each year in
Australia. Over 95% of the grain contracts executed in Australia each year reference GTA Grain
Trading Standards and/or Trade Rules.

GTA has established the Australian Grain Industry Code of Practice. All GTA Members are required to adhere to this Code of Practice. GTA Members are drawn from all sectors of the grain value chain from production to domestic end users and exporters. GTA has over 295 organisations as members.
Member enterprises range from regional family businesses to large national and international trading/storage and handling companies involved in grain trading activities, grain storage, processing grain for human consumption and stock feed milling. The exporters of all Australia’s bulk grain shipments are GTA members.

GTA is an active member of the International Grain Trade Coalition (IGTC). This is a global association of grain trade associations and commercial stakeholders involved in the cross border trade of grain, oilseeds, pulses and related products.

A list of GTA Members is attached.

2. Communicating and Understanding “ESG” including Sustainability

GTA recognises Environmental Social & Governance (ESG) and sustainability is an important issue for industry and GTA members.

The sustainability objectives of individual companies in the grain supply chain whilst varied, support an efficient, health focussed and safe global grain trade that improves the world’s food security.

To support its members, industry and government GTA has developed materials to assist in communicating grain supply chain Environmental Social & Governance (ESG) credentials, including the publication of Australia’s Grain Supply Chain and its Environmental Social & Governance credentials. The purpose is to demonstrate Australian industry has in place significant process, and practices in relation to good ESG and Sustainability with respect to:
• Food Safety,
• Traceability,
• Sustainability,
• People & Safety,
• Food and nutrition quality, and
• Integrity.

Figure 1 – Australian Grain Industry ESG Credentials

In addition, and recognising the sustainability objectives of individual companies in the grain supply chain whilst varied, support an efficient, health focussed and safe global grain trade that improves the world’s food security. GTA has published under the Australian Grain Industry Code of Practice
Technical Guideline Document (TGD) 22. Sustainability Program Principles & Guidelines. The purpose of this document is to assist individual businesses as they consider their sustainability objectives and programs.

Figure 2 - TGD 22 – Sustainability Program Principles & Guidelines

We recommend both these documents (available on the GTA website at www.graintrade.org.au) be considered by DAFF in the research and collation of available materials relating to ESG and
Sustainability.

2
3. General Comments on Sustainability and Traceability

Australia is well placed internationally and enjoys an enviable position in world agricultural trade because of its existing regulatory standards, systems, and processes. These have been jointly developed and refined by industry and government over many decades.

In the grain industry the management of product quality and food safety is achieved through a systems-based process of quality assurance where risks are analysed, and process controls are employed through the supply chain to minimise risk as much as practically possible. The Australian grain industry Quality Assurance process has a strong focus on the assessment and discovery of any grain quality issues prior to the product being consigned to the domestic or export customer.

Within the grain industry quality assurance framework traceability, whilst important is primarily a support function within the Quality Assurance process and is a component of exporting grain to meet the Export Control Act. The grain industry supplies grain to export registered establishments that meet quarantine obligations including certification requirements along with required traceability where designated by the importing country requirements.

It is recognised that specific customers and some import markets seek and require additional information and/or certification. This can be grain (for example Canola into the EU – see below) and/or grade specific. The industry, or industry participants will respond to such requirements in line with market, and supply chain value. Market information and provenance requests may evolve and increase over time and industry may need to adapt or enhance its systems to be able to meet any justified sustainability requirements and maintain its licence to compete.

The quality assurance processes are detailed in the Australian Grain Industry Code of Practice and associated TGDs.

Canola to EU
In response to EU regulation under the Renewable Energy Directive (REDIII), the Australian canola industry has been successfully exporting sustainably certified canola to the EU since 2010 under the
ISCC scheme.

This requires the Australian industry’s GHG footprint to be recognised as meeting target levels, as well as exports meeting broader sustainability criteria. AOF established a ‘Central Office” in 2019 to simplify and standardise the process for growers and participating companies. Now known as
Sustainable Grain Australia, 20 participating companies, have exported over 30mmt since its inception, with over 5000 participating farms annually, thus validating Australia’s farmers sustainability credentials. In addition, CBH also facilitates canola exports under the ISCC scheme.

4. Important Principles around sustainability and traceability

GTA believes there are a number of important principles and practical concerns with regards to sustainability, and in-turn traceability that need to be recognised by stakeholders including producers, policy makers, regulators and in some cases consumers. These include:
• “One Size does NOT fit all” – Recognition of differences in:
o environment,
o application of suitable management practices,
o resources,
o level of sophistication and
o adoption of science and technology
means that a particular regulatory or practical approach suitable for one circumstance or
jurisdiction may not be suitable for all applications. Forcing a “One Size fits all” approach
increases the risks of unintended and perverse outcomes such as lower food production and
supply chain inefficiency, lower food security, environmental damage and adverse
sustainability outcomes.

3
• Market Requirements – It is a false assumption to think that implementing sustainability
and traceability will naturally result in market premiums. Some markets (generally more
developed economies) may reward suppliers for sustainability and traceability. Some markets
may demand it as a condition of market access. While many markets, particularly price
sensitive markets in developing countries will not pay premiums for accredited “sustainable”
or traceability systems. Therefore, while sustainability and traceability are important
functions as part of production and supply chain management, the extent to which elements
are disclosed or included in bi-lateral market access arrangements and/or commercial
negotiations must be approached in the context of each market. This is particularly the case
for many Australian grain markets.
• Trade Barriers – Sustainability and traceability requirements have potential to increase
production and supply chain costs, increase risks and potential to become trade inhibiting
Non-Tariff Measures (NTMs), without a commensurate return in net value. In addition, even
when markets will pay premiums for sustainability and traceability, their requirements and
implementation may not be practical and consequently serve to reduce value and increase
costs and risks (such as the recent case of the EU Union Database for Biofuels (UDB)) 1.
Where Australian industry see’s inhibiting NTMs emerging in this space, we are of the view
that industry should focus commercially on meeting market requirements wherever possible
and concurrently seek to address NTM issues through advocacy. This advocacy is to the
destination market customers and regulators as well as to the Australian Government, to
address the NTMs in both bilateral and multilateral settings.
• Mass Balance - Comingled supply chains (such as grain) make traceability from “farm to
fork” (beyond one-step forward/one step back) challenging. Therefore a “mass balance”
approach is the most feasible and practical approach to large scale traceability and
sustainability requirements where they are necessary and deliver value.
• Providence - Providence (sub country level) promotion, demands or requirements will
increase risk and reduces supply chain efficiency for Australian grain producers and exporters
(for example due to regional droughts etc). Grain is a fungible commodity and is traded based
on commercial product specifications.
• Science and Evidence based - All sustainability, traceability and biosecurity/quarantine
requirements should be addressed on a risk-based approach (as opposed to hazard) and driven
by scientific evidence and comply with the rules based global trade framework.
• Accreditation - GTA supports a sustainability and traceability approach based on
certification or accreditation, rather than repetitively supplying “evidence” and data on a
transactional basis. GTA supports the ISCC and ISCC+ accreditation systems in place in the
Australian grain sector managed by Sustainable Grains Australia and CBH Grain. This
supports efficiency as well as consistency and harmonisation of requirements in the sector.
We note that over 90% of the on-farm accreditation requirements for ISCC farm accreditation
are either legislative/regulatory requirements in Australia or considered “good agricultural
practice” (GAP) and supported by industry codes and guidance documents.

5. Specific Comments on the Discussion Paper

a) Purpose and Scope of the Strategy

GTA is supportive of the approach adopted by The Australian Agricultural Traceability Assuring
Sustainability Claims Working Group (ASCWG) in considering 3 aspects:

1. Understanding essential sustainability credentials
2. Identify approaches to support data-driven claims
3. Support verification for market access purposes

In the ASCWG’s review and deliberations we re-iterate the concepts and principles detailed earlier, particularly:

1
The EU Union Database for Biofuels (UDB) was established in 2024 as part of the EU’s efforts to promote the use of sustainable biofuels and track the environmental performance of biofuel supply chains in response to emerging concerns about fake used cooking oil entering the biofuel market. The implementation and its proposed timetable was impractical in its design and execution and for a period posed a serious market access risk for Australian canola exports to the EU.
4
• Recognising differences stages across industries and economies, including “one size does
NOT fit all”
• Support for accreditation/certification approach being utilised in grain sector via the ISCC
and ISCC+ systems,
• the “mass balance” approach to comingled supply chains
• Market access should be risk and science based, and not prescriptive.
• Sustainability and traceability requirements seek to minimise costs, compliance burdens and
trade inhibiting or distorting NTMs.

b) International market and regulatory requirements

The analysis undertaken by ASCWG indicates the drivers for the increased emphasis on sustainability and traceability is not ‘purely responding to consumer expectations’ but rather is a mixture of an increased focus on corporate responsibility initiatives and regulatory directions.

GTA, agrees there is inconsistent messages from markets regarding the reporting of claims and supporting data. We re-iterate there is distinct differences between some markets including price sensitive markets, particularly in developing countries, and again caution of the risk of trade inhibiting
NTMs, compliance burdens and costs.

The level of uncertainty and direction across governments and markets is a concern and warrants greater examination and understanding. We would suggest there is scope to continue research and identify opportunities to capture and deliver value, and alternatively to identify segments and circumstances that may lead to market access risks, costs and compliance burdens without a commensurate return in value to producers and supply chains, i.e. real and consistent consumer and market demand must form the basis of compliance requirements.

c) Key evidence expectations

The Discussion Paper states that different expectations exist for both the form of the evidence required to support a sustainability claim as well as the subject of that evidence. These differences exist commodity to commodity, market to market and supply chain to supply chain.

GTA agrees the range of expectations and requirements are broad and are continuing to evolve making it challenging in some cases for governments and industry to choose a single methodology to support sustainability claims. GTA addressed this in supporting its members by providing the forementioned
Australia's Grain Supply Chain and its Environmental, Social and Governance Credentials publication which details the systems approach the industry has in place to meet customer expectations and to provide confidence that these expectations can be met.

We note that while evidence and data are important, the priority for effective and credible communication to customers and consumers must also be recognized.

6. Conclusion

GTA welcomes the opportunity offered by DAFF to provide comment on the Discussion Paper and support the government’s objective to build its research knowledge and understanding of international market requirements for proof of sustainability claims.

It is important the key principles around sustainability and traceability are recognised and understood as part of the research and policy development process.

I look forward to the progress of this work and further opportunities to engage and provide input.

Thank you for your consideration of this response.

Pat O’Shannassy

5
Chief Executive Officer

6
Membership List as of 23 January 2025