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Value chains

The value chain of a product refers to the complete set of activities, that are necessary to deliver a product to the customer. What happens throughout this process can have a significant impact on mitigation and productivity.

When discussing how to alter agriculture to make it climate smart, it’s important to keep in mind that productivity, mitigation and adaptation are not only limited to what happens on farms. These three principles that can also be applied to every part of the whole value chain of a product.

A flow chart which shows the process of a product through sets of activities. Start from the left: production on farm to handling; processing and storage; to distribution; and to the consumer.  The value of the product increases from left to right, as you progress towards the consumer.

Figure 1: value chain (Click to expand)

A lot of actions are needed before a bottle of milk or wine can be stacked on a shop shelf, and each of these steps results in an increase in value of the product. In the UK for example, a litre of milk from the farm costs around 20p. By the time you buy one litre of milk in the supermarket, its price has risen to around 70p. This rise in price can be explained by the processes involved in getting the milk to the supermarket: transporting, cooling, packaging, labelling, quality control, and stacking it on the shelves.

While some products are responsible for the majority of emissions before they leave the farm gate, the carbon footprint of other products is impacted by the processes that happen within the value chain. Wine (similar to many other plant based products) itself, does not have a large carbon footprint, however the bottling and transportation of wine are responsible for a considerable amount of GHG emissions. In viticulture mitigation targets should focus on the value chain, rather than the growing and harvesting of grapes.

At each step of the value chain there is the potential for some of the product to be wasted. This can happen for a number of reasons. It may be, for example, that some of the products are deemed to be of low quality, some have failed cooling, or some may simply be the wrong shape. As a consumer, your product choices can influence the whole value chain.

The value chain can vary for each product. Some farms sell their products directly in farm shops, enabling them to make a higher income. For example, rather than selling a litre of milk for 20p to a cooperative who can go on to sell it for 70p, the farm can sell it for 70p in their own shop, keeping the additional 50p that would otherwise have gone to the cooperative, for themselves. However, farmers then also have to worry about packaging costs and spoilage of the product. Clearly, if you have a farm in the middle of nowhere, you cannot sell milk from 400 cows per day to the local village community and since milk cannot be stored for a long time, direct farm sales can be risky. However, buying directly from the farm can assure you as the consumer that the carbon footprint of the product has not been increased by using fossil fuel for transport.

Food waste has recently been identified as a major problem in food production and security. It is currently estimated that about 1.3 billion tonnes of food are lost each year, which is approximately one third of the global food production. Causes of food loss include: poor storage, refrigeration, packaging, inadequate facilities and transportation, quality standards, manufacture processes, best-before-dates or simply leftovers. Adapting the value chain to decrease the amount of food that is wasted does not impact production, but will increase the amount of food that is ultimately available to the consumer.

Life cycle assessment (LCA)

LCA is a tool to perform an environmental sustainability analysis for a product or technology. As the name implies, LCA can be used to analyse every part of a product’s ‘life’. Using wine as an example, this might include examining each stage of the process from growing the grapes and harvesting, pressing and fermenting the juice to bottling and distribution, as well as wastage of the wine and consumption.

The LCA analyses the input and output of resources for: energy, fertiliser, yield and GHGs, and their environmental impact for each process. The complexity of food production systems can make LCAs tricky; as a decision on which processes to include, and the environmental impacts are often not directly measurable. However, LCAs can provide valuable information about the carbon footprint of a product including a broader network of processes associated with the food item, rather than just the production of the raw material.

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This article is from the free online course:

The Future of Farming: Exploring Climate Smart Agriculture

University of Reading