Australia-More costs for farmers.
AUSTRALIA-THE COST OF CARBON EMISSIONS TO FARMERS.
A study has found farming will cost up to 25 per cent more under the Federal Government’s proposed Emissions Trading Scheme.
The report, prepared by the Centre for International Economics, says wool and beef producers will be hit the hardest.
The centre’s David Pearce says an emissions trading scheme would also result in fewer exports, less agriculture production, and higher food prices.
"By 2030, we’re projecting that emissions costs, that is the requirement to purchase emissions permits, if agriculture is included in emissions trading, could be up to 22 to 23 per cent of beef industry costs, and up to 25 per cent of wool industry costs."
And members of a Senate committee have accused the Agriculture Department of not being properly briefed before advising the government on the effects of emissions trading.
National Party Senator Ron Boswell, from the Rural and Regional Affairs Committee, claims the department didn’t know about the latest study.
"I mean, we’re paying huge money for this group of people up here, I mean what do they do, don’t they read papers?" he said.
"I’m interested in what they’ve been doing for the last three months." MEAT, especially beef, dairy products and wool could cost a lot more if farmers are required to buy permits under the Federal Government’s planned greenhouse emissions trading scheme, a farm policy think tank says.
Because of the high methane emissions from cattle, beef could cost almost 25 per cent more in 21 years and 5 per cent more in 11 years, the Australian Farm Institute says in a report published today.
Billions of dollars’ worth of meat and milk production could cease, as farmers decided they would be unable to pass on their permit costs to overseas buyers. The lost production could be worth almost $11 billion by 2030.
"It is pretty big," said David Pearce, head of the Centre for International Economics, which was commissioned by the Australian Farm Institute to conduct the research. "They would be scrambling to find all kinds of ways to adjust."
Farmers are vulnerable because most agricultural produce is exported and Australia is a small player in a highly competitive market, the report says.
The researchers used one particular "conservative" model based on the likelihood farmers would at first qualify for free permits because this vulnerability makes them "trade-exposed" under the scheme. The cost blowout would be slow at first, but then would soar, they found.
By 2030 consumers could pay 15 per cent more for sheepmeat, 10 per cent extra for dairy, 5 per cent more for pork and 25 per cent more for wool if farmers pass on the cost of permits. Such rises might result in changed eating patterns as people buy less meat, Mr Pearce said.
The projections are based on a scenario in which all farmers become part of the trading scheme in 2016 with free permits, but each year must pay for an increasing portion of permits until 2026, when none are free.
Although farms are big greenhouse gas emitters - particularly of methane from livestock, crops and fertiliser - the Government has initially excluded them from the scheme, which it wants to introduce in July next year. It has said they could be included from 2015 and has pledged to let them know in four years.
The research has shown that even if the Government decided not to include farmers in the scheme, they would still bear extra costs because the price of transport, fertiliser, chemicals and other industry needs would go up.
Once they became participants, an estimated $6.6 billion of beef would no longer be produced by 2030, wool and sheepmeat production would tumble by about $1 billion, and $800 million worth of milk would be lost, the report says.
"Agricultural production will decline and exports will decline, particularly in meat-based industries, and there are economy-wide implications for that," Mr Pearce said. This was a "worst case scenario", he said.
Farmers might grow more crops and reduce animal numbers, or turn to more upmarket beef and dairy products, so their carbon cost for each animal would be lower, he said.
The institute, whose corporate sponsors include the NSW Farmers Association, Meat and Livestock Australia, the Twynam Agricultural Group and three banks, does not lobby, but will send its research to a wide range of policy makers, its executive director, Mick Keogh said.
