Unlike other industries, most of the carbon emissions in food production occur in the supply chain rather than as a direct result of the manufacturing process. This, according to a new report, creates risk of higher prices from cap-and-trade carbon pricing.
The report, titled Carbon Emissions - Measuring the Risks, is available from NSF International, a public health and safety company, and Trucost, a global provider of environmental data and analysis.
The report suggests that as much as 90 percent of its greenhouse gas emissions in food production occur indirectly, through supply-chain steps such as manufacturing of pesticides or the energy use in drying crops. As cap-and-trade pricing on carbon emissions raises input costs at steps along the supply chain, companies are likely to pass those costs along, ultimately raising the price food manufacturers pay for raw materials.
Average carbon costs at $15 per ton would amount to 1.6 percent of earnings before interest, tax, depreciation, and amortization in the food and beverage sector, according to the report.