Agriculture Sector: Challenges and Actions


Kirsten Patterson, Chief Executive, Institute of Directors New Zealand


  • Cathy Quinn (New Zealand), Non-Executive Director, Fonterra 
  • Tomás Regalado Papini (Central America), President Board of Directors, FUNDEMAS (Fundación Empresarial para la Acción Social) 
  • Dato’ Henry Sackville Barlow (Malaysia), Chairman, New Britain Palm Oil Limited 

Climate change is impacting the agricultural sector at a rapid pace. Tropical storms, flooding, rising sea levels and coastal erosion all affect agriculture and the ability for farmers to sustain crops and meet supply and demand.  

From the dairy sector to palm oil production and the sugarcane industry – all have been affected by climate change. These sectors are looking for ways to reduce carbon emissions through innovative thinking and technology to enhance yields and build a sustainable future to ensure local production of their natural resources.  

New Zealand (Dairy) 

Prolonged periods of rainfall have affected the production of dairy, which will lower the availability of milk in the long term. This will impact consumer behaviour and a need to look for alternative products. New Zealand dairy company, Fonterra, aims to continue production of high-quality milk and is addressing the need for a new capital structure that will support farmers.

The dairy sector values technology and science and is looking to lead innovation with a mission to phase out coal by 2037. Trials of wood pellets are underway as a potential fuel replacement with a challenge that lies in seasonal availability. The sector is also introducing new milk monitoring systems to lower emissions. Farmers will have the capacity to monitor milk temperatures via an app, therefore removing tanks where applicable, from the supply chain. Tech is fundamental to the success and innovation for the dairy sector and is embedded in the sustainability strategy supported by the board. 

Malaysia (Palm Oil)  

Coastal erosion, typhoons and severe droughts have caused disruption to harvesting; drought increases water stress to palms contributing to lower yields. Smaller areas of appropriate land also limit the ability for plantations to thrive. The palm oil industry is actively blocking off areas and limiting flood damage to estates. The cost of production is also increasing due to geopolitical issues and the Russian/Ukraine war. 

There is an intensive push for transparency in the supply chain and traceability of associated carbon costs. Methane is a key part of the carbon cost of production used in palm oil. The Malaysian and Indonesian governments are committed to reducing it with plans to phase out the use of older mills by 2030. This will require boards to make decisions around capital to meet compliance and an integration of science-based initiatives.  

The current challenges include monitoring and regulation with some dealers hawking produce to unaffiliated small holders. Those producers operating mills with origins that cannot be traced are taking their products to substantial markets in India and China, while certified palm oil goes to markets such as Europe, UK, Australia, New Zealand and America. 

Central America (Sugar)  

Current issues for exporters include a significant increase in tropical storms and droughts since the 1990s. A Central American association has been established as an umbrella for the representatives and boards of the industry, of which there are 44 mills from Guatemala to Panama. Currently, each country is tackling issues on an individual basis.  

Community stakeholders are included as a challenge for the industry, in particular, around water use. Costa Rica is focussing on stakeholder engagement on water data for watersheds where sugar is present and now have a watershed strategy in place. 

One third of the mills are now part of a round table on sugar and are pushing to promote it as a versatile product for use in the production of materials, such as plastic. This will require substantial capital to put into action but will ensure the localisation and production of the industry.   

Ambition to Action: Key actions for boards

Dairy – The New Zealand government announced in a world-first that farmers will pay for agricultural emissions from 2025. This includes for both methane (emitted from cows) and nitrous oxide from fertilisers.  
Palm Oil – The sector aims to reduce carbon costs by harvesting methane and eliminating the amount of palm oil produced from peat soils to offer competitive carbon cost to purchasers.  

Sugar – Programmes have been established towards sustainable practice and standardized processes within the next 5-10 years. Costa Rica has created an international, industry-wide stakeholder engagement programme to address climate change implementing monitoring, reporting and verification mechanisms.

This summary was provided by the session hosts.