The Implications of the Australian Government's Carbon Farming Initiative for Beef Producers
The CFI legislation will create a regulated marketplace for farm sequestration and mitigation activities, and farmers who voluntarily participate will earn offset credits which will be able to be sold to businesses that with to use those to reduce their total business emissions, or to claim carbon-neutrality for their products. In many respects, carbon offset production will for some farmers become one extra enterprise option available, bringing with it additional revenue and additional costs, new decisions about how to physically integrate the enterprise into a farm business, and the need for farmers to manage this enterprise in a way that adds to total farm profitability.
The Carbon Farming Initiative (CFI) has been proposed by the Australian Government as a legislated mechanism that will enable farmers to generate revenue from the sale of greenhouse gas sequestration and mitigation activities.
The introduction of a carbon offset market for farms will have significant long-term implications, and will entail both opportunities and risks for farm business managers. The research detailed in this report is an initial attempt to gain some understanding of the issues the farm sector and individual farmers will need to consider as this new farm enterprise emerges.
This report was prepared with funding from Meat & Livestock Australia.
Full report, pp 1-30 (42 pages), April 2011
Australian Farm Institute
Authors: Davison, S, Keogh, M
(Web) ISBN 978-1-921808-09-8
(Print) ISBN 978-1-921808-08-1
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While the exact design of an emissions trading scheme is yet to be developed, sufﬁcient information is known to be able to predict, with some certainty, that farm input prices will increase, particularly fuel and electricity, and a wide range of other energy-price sensitive inputs will also increase in price, including chemicals, freight and contracting costs. The result will be a reduction in the international competitiveness of Australian farming.
There are, however, potential opportunities that may arise for the farm sector to provide greenhouse offsets, which may generate income to counteract the anticipated additional costs. To have these offsets recognised within a national emissions trading scheme will, however, require concerted action by farmers and their leaders over the next year.
This discussion paper has been prepared with the objective of providing Australian farmers with a comprehensive collection of relevant information about this issue, so that farmers can participate fully in forthcoming debates and ensure Australian agriculture’s international competitiveness is retained.
The implementation of a greenhouse emissions trading scheme for Australia by either 2010 or 2012 (depending on the outcome of the next Federal election) presents potential challenges and opportunities for Australian farmers and the wider agriculture sector.
July 2007, pp. 1 - 60 (60 pages)
Publisher: Australian Farm Institue
Author: Keogh, M
One of the biggest challenges in making decisions about future climate change policies for agriculture is the great uncertainty surrounding future technological developments to mitigate greenhouse emissions. Will new technologies suddenly emerge that dramatically reduce agriculture’s emission profile? Will new clean energy sources quickly develop? To what extent will the unleashing of market forces (via an Emissions Trading Scheme) accelerate these changes?
The answers to these questions will become evident at some stage in the future, but cannot be predicted or modelled with any certainty. On the other hand, sufficient information is already available to enable reasonable estimates to be made of the probable costs associated with policy measures such as the proposed national Emissions Trading Scheme. Knowledge of the range of potential future prices that will be imposed on greenhouse emissions means that estimates can be made of the flow-on costs for farm businesses, and the cost impact of different policy scenarios can be modelled with some degree of accuracy.
This imbalance between the certainty of future costs and the uncertainty of future mitigation advances makes economic modelling of climate change policy proposals extremely challenging, with the outcome very dependent on assumptions that are made about the major areas of uncertainty. Recognising this, the modelling reported here is preliminary in nature, and does not attempt to foreshadow some of the dynamic changes or new developments that will undoubtedly arise in the future as a consequence of imminent policy measures. However, by detailing all assumptions and not taking a ‘black box’ modelling approach, the hope is that insights emerging from this work will assist further efforts to gain a better understanding of the future implications of this issue for Australian agriculture.
The research reported here has examined the implications of an emissions trading scheme (ETS) for Australian agriculture, using ten model farm businesses, three future greenhouse emission price scenarios, and four potential modes of engagement for the agriculture sector with the ETS.
The modelling indicates that increases in the prices farmers pay for farm inputs as a result of the ETS have the potential to reduce average farm cash margins in 2016 by between 3 and 9% in comparison with a business as usual scenario, with cropping specialists experiencing larger impacts.
September 2008, pp. 1 - 63 (63 pages)
Publisher: Australian Farm Institute
Author: Australian Farm Institute - Keogh, M & Thompson, A
The Australian Government proposes to introduce a national greenhouse emissions trading scheme which will commence in July 2010. In its initial stages, the scheme will require firms that directly emit more than 25,000 tonnes of carbon dioxide equivalent per annum to be participants, and to purchase government-issued emission permits equivalent to their estimated annual greenhouse emissions.
Transport fuel distributors will also be required to be participants, and will be responsible for the emissions estimated to be created when the fuel they sell is combusted.
Farm businesses will not be required to directly participate in the scheme in its initial years. The government has announced that the earliest that farm businesses might be required to participate in the scheme will be 2015, with a final decision to be made in 2013. The announcement of this timetable for decisions concerning farm business participation might lead to a sense of complacency about both the potential impact of the scheme on farm businesses, and the need for decisions about future farm participation. On both counts, it seems the complacency may be mis-founded.
Firstly, the fact that farm businesses are price takers in global markets and consumers of a wide range of inputs – many of which are energy or energy-related – means that the indirect impact of energy-price increases will directly impact on farm profitability, irrespective of farm-sector participation. Secondly, if farm businesses are to become scheme participants, administrative decisions will need to be made well in advance of 2013 in order for this to occur.
For these reasons, the research reported here provides critical and timely information that will assist the farm sector and policy-makers in future decision-making processes relating to this most challenging issue.
The research was commissioned before the Australian Government released its White Paper, specifying the preferred design of the national emissions trading scheme, and it therefore does not precisely model the potential impacts of those proposals on the farm sector. However, the scenarios modelled in this research are sufficiently close to the White Paper proposals such that the results of the analysis reported here are very relevant to considerations about future potential impacts of the scheme on farm businesses.
It is hoped this research will assist both the farm sector and policy-makers in reaching robust and appropriate decisions about the future role of the farm sector in the national emissions trading scheme. The changes likely to arise from these decisions will be profound and long-lasting, and for that reason require very careful consideration and analysis.
This report provides the Australian agricultural sector and its associated commodity and regional sub-sectors with a strong understanding of the economic implications of a range of different greenhouse policy scenarios. Prepared for the Australian Farm Institute, Australian Wool Innovation, Dairy Australia and Cotton R&D Corporation by the Centre for International Economics, the research report adds valuable information to the debate on greenhouse gas emission policies.
February 2009, pp. 1 - 68 (68 pages)
Publisher: Australian Farm Institue
As Australia moves towards the implementation of policies to reduce greenhouse gas emissions, much attention has been directed towards the potential for carbon sink forestry to provide signiﬁcant amounts of greenhouse gas sequestration, at a relatively modest cost.
While providing immediate sequestration and potential revenue for landholders, there are also some potentially negative aspects of an expansion of carbon sink forestry that require careful consideration.Residents in regions where plantation forestry has already occurred cite adverse socioeconomic impacts arising from large areas of plantations being established on farm land. Concerns have also been expressed about potential negative environmental impacts such as increased bushﬁre risk, changes to biodiversity, and reductions in water runoff.
Whether or not these impacts might arise in regions where future carbon sink forestry is concentrated will depend very much on the policy framework that is adopted by government to manage this issue.
The research reported here has involved an exploration of these issues, ﬁrstly from the perspective of the potential future scale of carbon sink forestry, and then from the perspective of the policy and approvals framework which will determine how carbon sink forestry develops in Australia in the future. It highlights that there is a need for further consideration of this issue and the development of appropriate policy if some of the potential adverse impacts are to be avoided.
The Implications of Greenhouse Mitigation Policies on the Demand for Agricultural Land is a compelling review of the existing research and results regarding the possible impacts of carbon sink forestry. The topics covered are:
- Current scale and rate of land use change
- Models of potential agricultural land use changes arising from greenhouse mitigation policies
- Potential impacts of carbon sink plantation developments
- Carbon sink plantation approval processes
This report constitutes a needed reference for any further research on the topic and outlines the need of consistent policies and approval processes.
October 2010, pp. 1-116 (116 pages)
Publisher: Australian Farm Institute
Authors: GHD Hassall
ISBN 978-1-921808-04-3 (Web)
ISBN 978-1-921808-03-6 (Print)
The implementation of Australian policies which will impose a cost on greenhouse emissions will bring
about some important changes to the business environment in which Australian sheep and wool producers
operate. Energy costs will increase, and this will have implications for a range of farm input costs, although
some uncertainty surrounds future cost impacts on fuel. At the same time, the Australian Government’s
recently legislated Carbon Farming Initiative creates potential opportunities for those landholders
voluntarily choosing to participate in carbon markets by becoming producers of offsets. Exactly how the challenges and opportunities associated with greenhouse policies will play out for individual sheep businesses is still very uncertain, but it is clear that those involved in the sheep and wool industries need to gain a good understanding of these issues and consider how they may impact on their businesses in the future.
Please note this Research Report is available in electronic version only
Full report, pp1-56 (72 pages), August 2011
Australian Farm Institute
Authors: Davison. S, Keogh. M
ISBN 978-1-921808-13-5 (Web)