Agriculture adapting to changes in climate'

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Agriculture adapting to changes in climate.
www.farminstitute.org.au
Mick Keogh Executive Director, Australian Farm
Institute.
Australias Independent Farm Policy Research
Institute
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Adapting

• to a changing climate
• to a changing policy climate

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Adapting

• to a changing climate
• to a changing policy climate

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Case study in adaptation NSW SW Slopes
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Adaptation has many elements
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Adaptation elements

• Climate and markets variable, and to some degree
  able to be predicted over short term.
• Machinery and technology available, but
  constrained by costs, markets.
• Plant animal species delivered by research,
  integrated by managers.
• Fertiliser/pest management systems delivered by
  public private investment.
• Management skills and training a function of
  personal and institutional drivers.

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Conclusions

• Adaptation is a very complex and unpredictable
  process
• Australian farmers have readily adapted to
  external drivers, including climate
• Markets are the key external driver
• Adaptation to climate change will require
  public/private investment, will cause major
  changes in some sub-sectors, but scale and rate
  of change do-able

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Adapting

• to a changing climate
• to a changing policy climate

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Policy climate

• ETS by 2010
• 900 largest direct emitters plus bulk fuel
  distributors required to directly participate.
• Agriculture major direct emitter to remain
  uncovered until measurement/administration
  issues resolved
• Permit allocation to be used to compensate for
  trade exposure, high costs (ETS participants)
• No adjustment/compensation measures proposed for
  agriculture.

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Input costs All broadacre farms
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Share of farm input costs ()(Average 2004
2006)
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Potential impacts

• 10 increase in energy-related input costs
  increases input costs by 3 on average, but 5
  for crop specialists.
• 10 increase in energy-related input costs would
  reduce wheat/crop farm operating margins by 30
• General cost of living increases will also be
  greater in regional areas.

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Offset revenue - an agricultural dilemma

• Big cuts later
• Impact on energy costs less initially.
• Value of offsets low in early stages.

• Big cuts early
• Impact on energy costs high initially.
• Value of offsets high in early stages.

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Economic emission leakage Potential policy
options

• Adjust diesel fuel rebate to neutralise loss of
  agricultural competitiveness as energy-related
  costs increase.
• Adjust regional tax zone rebates to recognise
  energy cost impacts.
• Farm tax/rebate measures to compensate for energy
  cost impact
• Climate policy equivalence as part of trade
  arrangements ?
• Farm carbon BMP systems to recognise
  abatement/mitigation outside of official ETS
  system (carbon equivalent price paid by
  government).

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Sectoral emission performance since 1990
Agriculture has received no credit for this
reduction in emissions.
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Adjustment to climate change will require a
considerable long-term effort, but the more
immediate issue will be adjustment to climate
change policy.
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