Australia: Growcom slams govt over carbon tax impacts on horticulture
The study looked at six horticultural farms and a processing facility, estimating rises in input costs such as fuel and electricity that would come from the existing emissions trading scheme price of AUD$23 per ton of carbon, which will rise to AUD$30.82/t by 2020.
The report found cost rises between 0.36-0.86% this year under the scheme, forecasting a rise to between 0.36-1.15% in 2020.
“In dollar terms, the six farms will experience increases in costs between AUD$5,102 and AUD$41,859 in 2012, increasing to between AUD$6,837 and AUD$56,091 in 2020,” the report said.
“The impact of the cost increases depends on the size and scale of the farm and where significant costs occur. For example, a farm or processing facility with large electricity costs will incur a greater impact than a farm with lower electricity usage because the carbon price has the greatest impact on electricity costs.
“Naturally, higher input costs have a negative impact on profit.”
The body has criticized federal minister for climate change and energy efficiency Greg Combet for comments made to the Australian Broadcasting Corporation saying farmers were “entitled to pass on cost increases caused by carbon pricing”.
Growcom policy manager David Putland said this claim was not an economic reality faced by most farm businesses that have to accept prices set by the market, and that are often manipulated by the major players.
“While agricultural businesses aren’t directly involved in the carbon price mechanism, they will be affected by increases to the costs of important inputs – such as electricity, fertiliser, chemicals and packaging,” he said.
“Given the typically low profit margins of most fruit and vegetable farms, these cost increases represent a significant reduction in farm profits.
“Of the six farms used as case studies in this report, three were already operating at a loss during the period of analysis.”
Putland said that as expected, the largest impact on fruit and vegetable farms would result from the increased cost of electricity, estimated at about 10%, which powers cold storage facilities on farm and irrigation.
“Some larger fruit and vegetable producers are facing increases of several thousand dollars per month, solely as a result of the carbon price. Of course, electricity prices will actually increase by considerably more than that because of other factors in addition to the carbon price.
“Most growers will be unable to pass these increased costs on because they have little control over the prices they receive. While the Government has provided assistance measures to households and polluting industries, there is relatively little assistance available to growers.”
The detailed report is available at www.growcom.com.au.