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RESEARCH ARTICLE
Contents Vol 47(3)

Adoption of environmental assurance in pastoral industry supply chains – market failure and beyond

L. I. Pahl
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Department of Primary Industries and Fisheries, Queensland, PO Box 102, Toowoomba, Qld 4350, Australia. Email: lester.pahl@dpi.qld.gov.au

Australian Journal of Experimental Agriculture 47(3) 233-244 https://doi.org/10.1071/EA06031
Submitted: 11 January 2006  Accepted: 26 July 2006   Published: 12 February 2007

Abstract

This paper describes adoption rates of environmental assurance within meat and wool supply chains, and discusses this in terms of market interest and demand for certified ‘environmentally friendly’ products, based on phone surveys and personal interviews with pastoral producers, meat and wool processors, wholesalers and retailers, and domestic consumers. Members of meat and wool supply chains, particularly pastoral producers, are both aware of and interested in implementing various forms of environmental assurance, but significant costs combined with few private benefits have resulted in low adoption rates. The main reason for the lack of benefits is that the end user (the consumer) does not value environmental assurance and is not willing to pay for it. For this reason, global food and fibre supply chains, which compete to supply consumers with safe and quality food at the lowest price, resist public pressure to implement environmental assurance. This market failure is further exacerbated by highly variable environmental and social production standards required of primary producers in different countries, and the disparate levels of government support provided to them. Given that it is the Australian general public and not markets that demand environmental benefits from agriculture, the Australian government has a mandate to use public funds to counter this market failure. A national farm environmental policy should utilise a range of financial incentives to reward farmers for delivering general public good environmental outcomes, with these specified and verified through a national environmental assurance scheme.


Acknowledgements

I gratefully acknowledge the funding provided for this research by Rural Industries and Research and Development Corporation, Department of Primary Industries and Fisheries Queensland and CSIRO Sustainable Ecosystems. A great deal of thanks is extended to people who contributed to this research at various times: ACNielsen, MarketSense, Roslyn Sharp, Wendy Mort, Kerry Miles, Guy Newell, Peter Twyford-Jones and Katrina Warman. I also thank Anna Ridley for providing encouragement and guidance while this paper was being written, and for her constructive criticism of several drafts.


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