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Delayed CPRS could still cripple farmers & slash food production

4 May 2009

“FARMERS are relieved the Federal Government will defer introducing its Carbon Pollution Reduction Scheme (CPRS) for 12 months and wind-back its first year fixed carbon price, however, the CPRS could still devastate the farm sector,” National Farmers’ Federation (NFF) Acting President Charles Burke said.

“With Australia representing a paltry 1.3% of global emissions, and Australian agriculture just 16% of that 1.3%, policy needs to be measured and in line with a global response. New research released today starkly exposes how climate change policy can be far more damaging for our farmers than climate change itself.

“While we welcome the deferral, we still urge the Government not to dogmatically pursue covering agriculture within a CPRS, especially in light of the new research showing that the farm sector – as the backbone of the national economy and the most reliable of all sectors when the economic chips are down – could be devastated. The new data is clear cause for pause.

“Today’s release of the Centre for International Economics report ‘On-farm Impacts of an Australia ETS’, commissioned by the Rural Industries Research and Development Corporation, coincides with the Government’s rethink and quantifies the crippling blunt force trauma to be inflicted on Australian farmers.

“That is, the CPRS is inappropriate for driving mitigation from the agriculture sector and could decimate the future of Australian food and fibre production. For example, under the CPRS, with a permit price of $25 per tonne of CO2 emissions, on-farm analysis reveals that farm cash income (cash receipts less cash costs) would plummet by more than 60% for an average beef farm – and by 125% if the price is $50/tCO2-e.

“Not many businesses and, therefore, economic activity and jobs, can survive when costs are bumped up by at least 60% overnight, let alone plunge into negative profit territory.

“While it is accepted that agriculture cannot be covered by the CPRS at this time, the new data shows no-one is immune, confirming that agriculture will suffer no matter what – both if directly covered by the CPRS (through the costs of buying permits) or indirectly as an uncovered sector (through indirect cost hikes for petrol, electricity, chemicals and other goods and services).

“All farms will see their farm business profit fall, with average beef farmers suffering most with business profits in today’s terms reducing by over $36,000 at $25/tCO2-e, dairy farms losing $23,000 and sheep farms losing $14,000.

“The news gets worse for Australia when you consider that most of our farm products are exposed to the global marketplace. We are a valued supplier of high quality produce, that’s how we are currently positioned in the world market, but we are a small player in total. Our farmers will find it impossible to pass on these extra costs to customers and end-users, putting unbearable strain on our $30 billion-a-year farm export sector.

“Further, with over 300,000 Australian jobs directly employed in our farm sector and over 1.5 million jobs dependent on farm production throughout the economy, we would face the very real prospect of an economy-wide shutdown.

“As the report highlights, farmers are limited in their capacity to respond to being covered by an ETS. Some may move away from emission-intensive activities, like livestock, to activities with fewer emissions. Some will close their otherwise viable farm business. Others may plant trees instead to offset emissions, opening up a range of additional considerations regarding water and broader environmental outcomes.

“Australian farmers can make a further, vital contribution to mitigating greenhouse gas concentrations but today’s report highlights that the CPRS is a long way from being an appropriate policy. The Government must work with Australian farmers on alternative, voluntary, market-based mechanisms that maximise the positive outcomes for the environment, consumers and farmers.”

[ENDS]

Media Enquiries: Brett Heffernan on (02) 6273 3855 or 0408 448 250.

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