Friday, June 03, 2011

We’ll all be rooned, said the Farm Institute

The Australian Farm Institute’s report on the impact of the “Carbon Tax” is factually accurate and misleading at the same time. It is factual but omits some facts which change the facts. An average grain grower’s profits will be slugged $36,000 in extra costs with carbon at $36/tonne. That’s all most farmers heard. “Carbon Tax Bad”. As an exercise in political theatre it succeeded. As a basis on which to make decisions it fails.

While the cost curve stretches uninterrupted into the future, it is a false future. It is a future without measures for protecting trade-exposed businesses like agriculture. It is a future without rising food prices as increasing demand due to population rises and shrinking supply due to Climate Change collide and force price takers to take higher prices. It is a future with no farm-based carbon credits generating revenue. And it is a future in which farmers ignore price signals and make no attempt to innovate their way around higher input prices.

The Report doesn’t conceal the fact that it is concealing the facts: “The modelling does not incorporate any assumptions about additional dynamic responses (over and above normal productivity growth) by farm business managers to the additional costs, and as such provides a projection of the potential challenge these policies will pose for farm businesses, rather than attempting to predict future outcomes.” This subtle distinction between projections and predictions reminds us of John Laws’ claim in the “Cash For Comment” scandal that he was not making commentary. He was an entertainer. His listeners would decide otherwise. Likewise these projections became predictions at the hands of the journalists. “Carbon Tax to cripple agriculture” roars the headline.

The 900lb gorilla in the kitchen is the fact that the National Farmers Federation commissioned the research to use in its negotiations with the Government. The level of hysteria surrounding the issue can only help its cause.

For information about the Carbon Farming Conference & Expo and other Carbon Farming Week activities, click here.

For information about the Carbon Farming & Trading Association, click here.

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