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Carbon scheme hits dairyfarmers

Posted on June 3, 2009, 8:08am

Dairyfarmers will be among the hardest hit financially by the Carbon Pollution Reduction Scheme, according to a new ABARE report.

Impacts from CPRS will vary based on the proportion of emissions intensive inputs, the emissions intensity of production and the extent to which agricultural processors also pass on their increased costs to farmers.

ABARE executive director Phillip Glyde released the report this week entitled “Effects of the Carbon Pollution Reduction Scheme on the economic value of farm production”.

“Australia’s agriculture sector will be affected by the introduction of the CPRS in 2011 through increases in input costs,” Mr Glyde said.

“There is also a possibility that agricultural processors will pass some of their higher costs on to farmers through paying lower prices for inputs from farmers.”

The report showed the economic value of farm production in broadacre industries could decline between 0.3pc and 1.9pc in 2011 as a result of the CPRS, depending on the degree of cost-price pass-through from processors to farmers.

The greatest effects in 2011 are expected in the dairy industry, with average farm income estimated to fall by 1.9pc (around $1800), assuming 100pc cost-price pass-through.

Dairyfarmers are this year struggling with revenue losses up to 30pc or more caused by the global economic crisis.

Mr Glyde said the CPRS, combined with a global response to climate change, would reduce the expected negative effects of climate change on agricultural productivity in Australia.

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