Australian and international farm policy news

Will the government deliver on water infrastructure upgrades?

The latest version of the proposed Murray-Darling Basin Plan was released in late November for 20 weeks public consultation, and received much criticism from the irrigation industry and environmental interests. Most criticism focused on the ‘number’; 2750 gigalitres to be recovered from the river system by 2019 and allocated to the environment. It is apparent that most of this water is to be recovered by buying back irrigation entitlements, with governments and the MDBA again showing a marked reluctance to invest more heavily in irrigation infrastructure upgrades as a first priority. There was also considerable criticism that despite the volumes of environmental water proposed, there is no obvious plan for the use of that water, and a marked reluctance to spell out exactly how the community will be able to judge whether the water is being used effectively and efficiently – a requirement that is being placed on irrigators but apparently not on environmental water managers.

Irrigators and regional communities have expressed anger at the proposal, saying the ‘number’ is too high and that agriculture has already contributed its share via previous buybacks. Environmental groups say the ‘number’ is not high enough, and unfortunately the so-called ‘science’ in support of the plan provides little guidance as to who is right or wrong.

Lean meat back on the table

The National Health and Medical Research Council (NHMRC) recently released revised Australian Dietary Guidelines, www.eatforhealth.gov.au, for consultation. A positive change from the first draft of these guidelines is that lean meat should be back on the shopping list. The first draft attempted to incorporate ‘environmental’ considerations into dietary guidelines, but it seems the authors may have discovered how complicated it is to try and make judgements about the environmental credentials of different foods. Lean meat and alternatives are recognised for their protein contribution to diets, but also for important nutrients including long-chain omega 3 fatty acids. The guidelines recommend eating from a wide variety of nutritious food groups including vegetables, fruit, whole-grains, lean meat, poultry, fish, eggs, low-fat milk and yoghurt.

 

So what of Durban?

Little was expected from the 17th Conference of Parties (COP17) to the United Nations Framework Convention on Climate Change (UNFCCC) but some analysts believe the results were almost as good as could be expected, given global economic turmoil and the uncertainty of climate change science.

There was never an expectation that a global legally binding agreement would be delivered at Durban, but agreement to ‘develop a protocol, another legal instrument or an agreed outcome with legal force’ applicable to both developed and developing countries by 2015 for implementation from 2020 was seen as a major step forward. Inclusion of both developed and developing countries in a future agreement eliminates one of the most significant barriers to a future international agreement on the issue.

Parties agreed to extend the Kyoto Protocol to 2017, but of the major countries that have ratified the Protocol, Canada has withdrawn, and Russia and Japan are not sure starters. Their reluctance to re-sign is mostly due to the fact that the Kyoto Protocol currently only covers about 15% of global emissions, compared to 30% when originally negotiated. It is anticipated Australia, New Zealand and the EU will re-sign and extend the life of the Kyoto Protocol, the first commitment period of which expires in 2012.

Extension of the Kyoto Protocol provides some certainty for the flexible Clean Development Mechanism (CDM), which has been the source of the bulk of internationally-traded carbon credits. The uncertain future of the CDM prior to Durban had resulted in a significant reduction in CDM projects over the last 12 months.

A thriving CDM market is important to Australia, because the Australian Government’s ‘Clean Energy Future’ legislation has been enacted to establish a carbon market from July 2012, and Treasury projections are that Australian businesses will need to import up to 400 million international carbon credits annually in order to meet the national target of an 80% reduction in net emissions by 2050.

The current European financial crisis has affected demand for carbon credits and created an excess of supply of permits from the EU ETS. This means Kyoto compliant carbon credits are currently trading at historically low prices. To prevent a collapse of the carbon market, the EU is discussing how to intervene in the market and restore competition. Global uncertainty regarding carbon markets and climate policy is affecting investment in the sector.

What next for the live cattle export market?

While not necessarily a surprise for beef producers in northern Australia, the announcement by the Indonesian Government confirming that it intends to reduce import quotas for Australian live cattle to 280,000 head in 2012 (down from 520,000 head in 2011) is yet another blow for the northern beef industry. While Indonesia’s President has said the decision was in line with the country’s policy of being more self-sufficient in beef production, many in the industry believe the announcement is a payback for the manner in which the Australian Government implemented the suspension of live cattle exports to Indonesia in 2011.

Recent AFI research highlighted that the transport costs involved in trucking northern cattle to domestic markets makes the option unprofitable, and is also likely to result in an oversupply of beef into domestic markets which will lower farmgate prices. The weight and breed requirements of the Indonesian market are specific to that market, and mean that producers’ ability to modify production to meet the requirements of other live export markets will take some time.

Keep up-to-date with discussion on current issues in Australian and international agriculture policy via the Ag Forum on the Institute website.