Wednesday, August 12, 2009

Farm Institute flogging a dead argument?

Recent comments by the Australian Farm Institute and the Bureau of Rural Sciences prove that there is a vast chasm in the knowledge of soil carbon issues among those who should know more. The AFI made the startling announcement recently that there are some blockages to trading in soil carbon. The first mentioned was that Kyoto rules stand in the way of Australia’s farmers. But anyone observing the events leading up to the Copenhagen Round of Talks know that the ‘rules’ were only good for the period they covered. It is all negotiable. That’s how the system works. And the USA is dealing itself into the game with the demand that Agriculture be given a better deal than it has had to date. The World Bank, the FAO, and the EU all agree. And as the USA is bringing China to the table, it is likely to have some sway. All the parties to this coordinated assault on the distortions in the Kyoto Protocols are determined that it be a global solution. It is hard to see Australia staying out.

The second blockage mentioned by the Farm Institute is our Government’s decision not to include soil carbon offsets in the CPRS. This means we have only the Voluntary Market to trade in, ‘at an enormous discount in price’. Firstly, there is a mechanism whereby these offsets can be sold into the mandatory market. (Commercial in confidence for the moment.) And secondly, how can anyone pretend to know what the price relativities will be between the two markets. Anyone who has observed the market since day 1 knows that nothing can be certain in the pricing area. The demand for offsets is huge and growing.

Another blockage mentioned is the possibility that a farmer might change their land management to an anti-soil carbon regime and face paying back the money they received when they first sold their offsets. In fact they would be faced with paying even more because the market will have moved by then. (Again, the AFI claims psychic powers to be able to see the future.) There are two reasons why this is a scare tactic. Reason 1: A farmer would be a fool to throw away the co-benefits of high soil carbon levels. In fact, the anti-soil carbon trading faction maintain that farmers should increase their soil C for these co-benefits alone. What are they? High levels of soil C are associated with reduced erosion, reduced salinity, improved soil structure, better water holding capacity, reduced need for artificial fertilisers, and all the benefits that come with healthier soil microbial communities. Reason 2: The Voluntary Markets are currently looking at 5-year contracts to maintain flexibility. This is the CCX model which forms the basis on the emerging US model being promoted as a global solution.

The Farm Institute makes another questionable claim when it says that farmers will need all their offsets to meet their own emission costs if they are included in the CPRS. But this is overkill. Surely we were left out of the CPRS and that was the basis for the first blockage? Again, the movement around Coenhagen is for a global solution that acknowledges Agriculture’s inevitable dependence on biological cycles and the unwillingness of the global community to punish farmers for growing food when the word faces a food security problem. The Australian Government would decimate our beef industry if it (as is currently the case) chose to be the only nation (plus NZ) to subject its farmers to punitive methane taxes when the Americans were rewarding their beef growers with incentive payments to reduce methane and the right to sell their soil carbon. The price competitiveness of Australasian beef would evaporate, as would the market and the industry here. Politicians aren’t that stupid.

Commentators such as the Farm Institute and the Bureau of Rural Science are curiously out of touch with the activity surroudning soil carbon. The Bureau released a report in March which claims to be a guide to the “potential” for soil carbon. It repeats all the old, discredited claims made by scientists who profess to know how soil carbon wll react under techniques which are still evolving and have not been subject to research trials yet. One wonders why the report was ever commissioned as nothing new appears in it. And its major finding – surprise – is that there needs to be more research before a market is possible. But markets are not made by scientists. They are made by buyers. And the needs of buyers are very different to those postulated by researchers.

In fact, the Farm Institute is stretching the point a little to say the BRS report was recent. It appeared in March. SO why even devote a blog post to it? It is not news.
Could it be that the AFI is intent on creating the impression that soil carbon trading is a non-starter? Search the reports and articles published by the Institute. Can you find one positive word for the soil carbon market? Can you find one presentation at an Institute conference tat supports soil carbon trading? It looks suspiciously like the Institute is part of the ‘push back’ against the notion of trade, a Canute-like resistance that has featured some of the nations top research establishments.

Those who parade the same old tired and discredited blockages to the soil carbon market cannot get their heads out of the past when all the action is taking place in the future. Appealing to ‘rules’ and scientific uncertainty does not impress buyers. Rules are for changing and uncertainty simply becomes a pricing factor, as all risks do. If all the hours that scientists and researchers have devoted to finding reasons why soil carbon won’t be traded had been invested in looking for ways that would make it possible, we would be trading today. The fact that so much taxpayers money has been spent on scare campaigns among farmers is scandalous.

The most highly respected soil carbon scientist in the world, Professor Rattan Lal of Ohio State U., warned the scientfic community to stop stalling: “Coming events are casting their shadow in this important and emerging field of immense significant to soil science, and the researchers must put their act together before the train departs the station.”

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