Agriculture out of the CPRS but not out of the woods

DESPITE the inability to cover agriculture under the Carbon Pollution Reduction Scheme (CPRS), as today’s White Paper reaffirms, the Australian Government must take steps to ensure our food production is not compromised, the National Farmers’ Federation (NFF) said today.
“The CPRS will cause pain to businesses… it’s designed to,” NFF President David Crombie said. “But it could potentially cripple Australia’s food production, hinder our self-sufficient food supply and drastically slash our global competitiveness, adding excess baggage to our $30 billion a year export sector.
“Once the scheme is in place, farmers’ energy-dependent costs will rise exponentially. The processing sector will face higher costs that will undoubtedly be passed back to farmers and on to consumers.
“That’s bad enough but, as things stand, our trading partners will not incur the extra costs imposed on us under the CPRS, which means it will be much harder for us to compete internationally. That’s why a comprehensive and all-inclusive global agreement is essential.
“In another whack for food production, according to federal Treasury modeling, the Government’s 5-15% emissions reduction target by 2020 is likely to spark an expansion of between 5.7 million and 26.3 million hectares of plantation forestry in Australia. That means less land to produce food.
“Given a CPRS is not appropriate for agriculture and, indeed, may never be, the Government must look outside the square at how it can facilitate ongoing, and even greater, food production in a carbon constrained economy.
“That dictates that alternate options and commercially-viable incentives to enable farmers to reduce emissions further be actively considered to complement the CPRS.
“Australian primary industries – led by farmers – have reduced their carbon footprint by a massive 40% since 1990. That’s the best record in the country and we’re happy to do more, provided the policies are appropriate.
“As Professor Ross Garnaut and the Productivity Commission have both highlighted, even while it is impractical for agriculture to be covered by the CPRS, the farm sector will bear the brunt of massive price hikes to up to half of its cost base.”
For example, Australian Bureau of Agriculture and Resource Economics data reveals that for sectors like cropping, 45% of their input costs are energy dependent – including fuel, electricity and other energy-dependent costs, such as freight, fertilizers and crop contracting.
“All of these costs will rise dramatically under the CPRS,” Mr Crombie said. “Assuming those costs are passed on, as is the intention, Australian families will pay a premium for essential foods at the retail end and farmers will be squeezed at the production end.
“The Government must now acknowledge the massive cost increases the farm sector will bear and, while ensuring ongoing production and productivity growth, off-set those costs with incentives for farmers to further reduce carbon emissions.”
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