When a processor or retailer wants to bring down the emissions in its supply chain, there are two broad routes open to it, and the difference between them matters a good deal more to a producer than the names suggest. Offsetting is the one most people have heard of, and it has been part of the agricultural conversation for years: the idea that a business can compensate for its emissions by funding external projects, like tree planting or renewable energy elsewhere. It is familiar and reasonably well understood, and it is also increasingly under scrutiny.
Insetting is less well known, but it has more direct relevance to livestock and cropping producers right now. Where offsetting involves funding external projects to compensate for emissions, insetting means reducing emissions within a company’s own supply chain, including the farms that supply it. For a processor or retailer committed to reducing its Scope 3 emissions, that means working with its producer suppliers to drive reductions at the farm level, in place of buying credits from an unrelated forestry project on the other side of the world.
The reason this matters for producers is that insetting programs create a direct commercial relationship between farm-level emissions performance and supply chain investment. Companies committed to the Science Based Targets Initiative (SBTi) are required to reduce emissions through their supply chain in preference to offsetting them externally, which gives them both a reporting need and a commercial incentive to support the producers they buy from to measure and reduce their on-farm emissions.
In practice, this is starting to look like programs that pay producers for measurable emissions reductions and provide tools to support efficiency improvements, alongside longer-term supply relationships with farms that can demonstrate credible, data-backed performance.
The prerequisite for any of this is accurate farm-level data that can be checked, and that data stays the producer’s own to share. A producer without an emissions record can’t take part in an insetting program, and can’t show a reduction or access any financial recognition for the work already being done on the farm. That is the connection between getting your data in order now and the commercial opportunities that are starting to emerge. Insetting is still early in its development in Australian agriculture, but the direction is clear, and the producers best positioned to benefit are the ones who have already started building the record.
