Maybe commonsense will eventually prevail here too

In the week that the carbon tax came into force, the Australian Government has released a survey commissioned last year to assess how well our farmers are across of the detail of carbon farming and the broader principles of climate change. The research makes interesting reading.

Two-thirds believe the world’s climate is changing; two-thirds believe that reducing emissions can help the atmosphere; but only a quarter believe the carbon tax will reduce the use of fossil fuels; and three-quarters of them believe they are being unfairly blamed for large-scale CO2 emissions.

Understandably, only a quarter of our farmers would take land out of production to store carbon. The prime reason given is that farmers believe that “first and foremost” they should be food producers, not caretakers of unused land. They don’t want to be paid not to produce. You will detect a different attitude in Australia to that in Europe, particularly in the earlier days of the then European Common Market.

The survey goes on to recognise that, for a range of reasons, there have been many positive changes to farming practices in Australia in recent times. Whilst a concern for the on-farm and wider environment does play a role as a driver for these changes, the primary motivation is economic (ie productivity and profits, livelihood and production sustainability and risk management). Carbon farming initiatives already undertaken are largely a by-product of changed practices designed to enhance productivity and they have led to other positive by-products such as ‘drought proofing the farm’.

The outcomes I found the most surprising were that only half knew that agriculture was to be exempt from the carbon price and only one in five understood the system of carbon offsets and their tradability.

Perhaps the response to the question about agriculture being exempted from the carbon tax was coloured by their appreciation that while, it may be notionally exempted, agriculture will nonetheless pay a very high price.

The reality is that the carbon tax is in place and is unlikely to be removed. I say that because it is not a simple matter for the Coalition, if it wins power, to repeal the carbon tax. It may be able to vary the pricing regime, or even change some of the rules, but essentially we’re going to have to get used to the tax.

The net result is that nationally, we are told, the hit on farmers will be $3.2 billion in the first year and revenues will fall by more than six per cent. Tasmanian farmers will take more than their fair share of that hit, because of the unfair exclusion of shipping diesel from the exemption provided to road diesel until 2014.

In week one, it is already clear that farmers will pay dearly for the higher cost of production inputs such as electricity and fertiliser. Refrigerants alone are expected to increase in price by 500%. It will be more expensive to import the inputs of farm production; and it will be more expensive for farmers to get their produce to market.

At the same time as farmers face higher costs, they will get lower returns. Farmers are price takers. Retailers are already saying they will reduce the prices they pay to suppliers rather than increase their prices to consumers. They are at the beginning of the supply chain and there is nothing they can do about that – especially in a retail market as concentrated as ours.

Somebody should tell that to Greg Combet, the Federal Climate Change Minister, who says farmers are entitled to pass on cost increases caused by carbon pricing, because that’s the way the economy is supposed to work. As if.

One Tasmanian vegetable exporter has calculated that the carbon tax will add $300,000 a year to its costs. For Tasmanian agribusinesses with tight profit margins, that sort of scenario is a grim prospect.

Our friends across the ditch were early movers on carbon control measures. Agriculture was excluded in the initial stages there too, but the enormous impacts on the sector became clear at the outset. The full extent of the NZ Emissions Trading Scheme was to come into effect on 1 July, with the scheme expanding to cover agriculture.

Earlier this week, their Prime Minister announced the indefinite postponement of the next phase of the scheme because he was “not prepared to sacrifice jobs in a weak international environment”. He went on to say that “in these times of uncertainty, the government has opted not to pile further costs on to households and the productive sector.” when other countries were moving slowly on climate change measures.

With these changes, domestic carbon units in will be effectively be capped at about $NZ10; and the market price is about $NZ6.95. The price here is $A23.

Maybe commonsense will eventually prevail here too.

Link to the carbon farming survey:
http://www.daff.gov.au/__data/assets/pdf_file/0009/2171088/carbon-farming-in-aust-market-research-report.pdf

• Farmers dig deep for Winnaleah water

Twenty farmers in the north-east have each contributed an average $150,000 to ensure the extended Winnaleah Irrigation Scheme goes ahead.

“That is an extraordinary expression of their confidence in the future of dairying and irrigated cropping in the area. It is also an expression of faith in the future of the economy,” Tasmanian Farmers and Graziers Association chief executive Jan Davis said today.

She was speaking at the opening of the $10.8 million augmentation to the original Winnaleah scheme, the fourth project to be completed under Tasmanian Irrigation’s highly successful model of schemes built as a partnership between the public and private sector.

“In this case, those 20 farmers have put their hands in their own pockets to the tune of $3.03 million so far,” Ms Davis said, “and there is still more than one thousand megalitres available so there could be more private local backing for the scheme.

“As we have said with the other irrigation schemes, Tasmanian farmers are putting their money where their mouth is, backing the Tasmanian and Australian governments to bring guaranteed water supplies to the best farming land in the nation.

“It is that commitment that makes agriculture the key driver of the Tasmanian economy.

“Our farmers don’t let you down,” Ms Davis said.

The water will be used over an irrigable area of 4500 ha of the rich chocolate soils around Winnaleah, fertile land that has established it as a dairy, potato, cropping and beef region.