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Climate change policy and Australian agriculture

- Friday, May 08, 2009

The Australian Farm Institute recently held its second Agriculture, Greenhouse and Emissions Trading conference, which brought together experts from a broad range of disciplines to consider the Government’s CPRS proposal as it will relate to agriculture.

Based on the realistic economic modelling currently available (here and here), it would make no sense for the sector to agree to participate as a covered sector in the CPRS after 2015, whatever the mechanism used to impose a cost on farm emissions. As a fully trade-exposed sector with limited mitigation options and as one of the least subsidised farm sectors globally, imposing even a partial emissions cost (in addition to the indirect CPRS costs that will arise in fuel, energy and processor pass-backs) on the sector would have drastic negative consequences for all broadacre and dairy industries. Horticulture and sugar would be less impacted, but would still experience negative impacts given their need to compete internationally against developing nation farmers.

But, as is always the case, the issues are a bit more complex. The farm sector may not have a choice about paying for its emissions, as the Government has already indicated in its White Paper (see Chapter 6 page 45 here). Leaving agriculture’s 16% of emissions out of the national abatement effort adds measurably to the cost of the Government achieving the fixed emissions target it signed up to in ratifying the Kyoto Protocol, and the energy and mining sectors are already demanding farm emissions must be included. Agriculture’s fractured relationship with the majority urban population is also likely to be further weakened if the perception arises that the consumer’s electricity and fuel costs are higher because farms are a big source of emissions and refuse to do anything to reduce them. The next request by the sector for drought support is also not likely to be favourably received if the perception is that farmers’ inaction on emissions has actually increased the risk of drought (remember – we are talking about perceptions here).

The issue is perhaps more accurately framed as; “How, when, and under what arrangements could agriculture consider the possibility of a cost being imposed on farm emissions?”

As conference participants identified, there are a long list of pre-requisites that would need to be considered. These include comprehensive land system greenhouse accounting methodologies; realistic farm emission mitigation options; bucketloads of money for R&D into both farm emissions mitigation and farm productivity (not substituting the former for the latter as at present); the development of workable systems to estimate and validate farm emissions; comprehensive economic modelling to look at the pros and cons of different CPRS-engagement models; realistic policy measures to prevent international leakage of agricultural emissions until the rest of the worlds farm sectors adopt similar policies; and an enormous and continuing communication and education program for farmers.

Can a work program involving all these elements feasibly be implemented? Who will take charge, and more importantly, where will the resources come from? Is it feasible to have all of agriculture (processors, financiers, farmers, inputs and service-providers) contributing to a program such as this and all heading towards an agreed objective? This was the critical question that attendees at the conference couldn’t answer.

Perhaps you have a view on this?


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