Carbon scheme will overwhelm ag profits

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WHEN Australian agriculture meets the Carbon Pollution Reduction Scheme (CPRS) next year, it faces an extraordinary scenario in which it stands to lose up to eight per cent of farm cash margins to a scheme it plays no part in.

Agriculture has been written out of the CPRS as being in the “too hard basket”, but in fact the scheme as it is designed will still overwhelm farm profits, according to a new report from the Australian Farm Institute (AFI).

Not only will agriculture wear additional costs passed on from players within the CPRS, like the transport and fertiliser industries, but it faces lower returns from large processors obligated to pay out under the scheme.

To cap off what AFI executive director Mick Keogh calls the “all stick and no carrot” nature of the CPRS, nowhere in the design of the scheme is there any incentive for farmers to innovate with offsets like forestry or soil carbon sequestration.

Nor are there imbedded incentives for research organisations to plunge money into emissions-reduction research and development, with no apparent means of making a return on the investment.

The result, says the AFI report, headlined “Emission Impossible”, is that by 2016, the farm sector could be bleeding between 2.4 and 7.8 per cent of its cash margins to the CPRS, with no ability to trade on its assumed ability to sequester carbon, other than through voluntary markets yet to be devised.

For more coverage see this week’s The Land.

Source: http://www.farminstitute.org.au