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Carbon: the next big farm commodity?

Make no mistake: carbon trading is going to be a fact of life. What that means for agriculture is largely in the hands of the farm sector.

Last week, Federal Climate Change minister Penny Wong made it clear at the CarbonExpo 2008 conference that there are no last-minute second thoughts from government about carbon trading and the Carbon Pollution Reduction Scheme (CPRS).

But it was the fact of the conference itself that really jolted home to me the realisation that carbon has arrived as a new commodity.

The conference hosted about 1100 people from 24 countries. The place was solid with suits—development bankers, financiers, carbon traders and technology company execs prominent among them. They were there to get in on the ground floor on a business that by 2050 is expected to be turning over $10 trillion—more than today's oil industry.

The overwhelming impression is that serious money is heading into carbon. Globally, about $64 billion went that way in 2007.

Where the money goes, agriculture can’t afford not to follow.

But while the business community is focused on the opportunities offered by carbon trading, the prevailing conversation in the Australian agricultural sector is about the potential for disaster.

There’s no question that the early iterations of the CPRS will be imperfect—in fact, it’s never going to be perfect—and it will create winners and losers. If farmers focus on the costs, and not the opportunities, they stand to be among the losers.

Right now, we know one thing about the CPRS: ag isn’t in it. That means we can be fairly certain of a second fact: farmers will become the recipients of extra costs passed down from suppliers, and carbon costs deducted from farm products by those they supply.

Because the CPRS is going to have a "soft start", and because hopefully the government has enough common sense not to kill the golden goose and so buffer agriculture from any extreme flow-on costs of the CPRS, farmers are unlikely to initially feel much pain.

Ag is going to be asked to carry its weight, however, whether it's within or outside the CPRS. The screws on this scheme are tightened gradually. By 2020, if business goes on as usual, they might begin to really hurt.

But only if farmers fail to harness carbon as a commodity.

Farmers work with the ultimate solar-powered system, the plant kingdom, which has the ability to take excess carbon from the atmosphere and turn it into something useful—including grain, meat, timber, and soil fertility.

Businesses across the planet increasingly want a new plant-generated product, carbon, and agriculture is uniquely placed to supply it—and at the same time increase its soil fertility, its ability to harvest rainfall, and grow crops and pastures.

It's a matter of applying a little human ingenuity and joining the dots.

There are currently some gaping holes in this plan, notably the interface that links carbon-conservation farming with carbon accounting systems. But the inexorable power of the market is at work. The holes will be fixed—roughly to begin with, but enough to get some momentum.

All that agriculture needs from Canberra is a carbon trading environment that provides incentives to sequester carbon, and incentives to trade in it. That job done, Canberra should get out of the way.

Like any other farm commodity market, the main business of carbon trading will be between farmers, who have to learn how to stack this new commodity away on their farms, and the markets that are beginning to materialise.

Get this trade working, and it could be an overwhelming positive for agriculture. Not only does it give farmers the ability to mitigate the extra costs that will come with the CPRS, it can boost the productivity of every other commodity they produce. What other commodity does that?

Carbon trading is new, and for most it will demand a whole new set of skills. But right now, there's no reason to suppose that it’s a negative for agriculture. It may be just the opposite.

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Measurement, speed of sequestration, returns to farmers... The answers to many of these questions will be revealed at the Carbon Farming Conference in Orange 18-19 November. (www.carbonfarming.net.au) The Grain Growers want it. Professor Garnaut said it must happen. Tim Flannery says it is essential.. incentives for farmers to grow soil carbon. It is a mystery why so many brilliant minds in Ms Wong's administration work so hard to keep farmers out of the biggest commodity market in the history of the planet. Had they employed these brilliant minds for a fraction of the time, formulating a SOLUTION to the problems they see, we would be trading soil carbon offsets now, farm soils would be capturing vast amounts of CO2, farm family incomes would be substantially boosted, rural communities would cease declining, while at the same time farm landscapes would start to recover, native species would return as biodiversity grows stronger... and Australian farmland would be buffered against the coming harsh conditions predicted by the Government's scientists. And the nation's greatest asset - its soils - would be restored to health, with reducing input costs and higher productivity. Now, why would anyone work so hard to prevent all this happening? President Obama has just been elected. He is a black man. And he is now President of the United States. Unthinkable before this day. He wrote a book called "The Audacity To Hope". We too have the audacity to hope. To hope for the day so many believe will never come: the day we see soil carbon traded at fair value and farmers are paid for what they grow... and all the good things flow from the rising levels of soil carbon. The Carbon Farming Conference is an important source of that audacity. Together we make each other stronger.
Posted by Michael Kiely on 7/11/2008 1:03:15 PM
carbon dioxide is 1.5 times heavier than air therefore sinks so with all the large cracks in our soil because of the six year drought we have millions of tonnes stored underground. when are we going to be paid to for this service? it could replace drought assistance.
Posted by hally on 8/11/2008 12:04:15 PM
When You set your course on a lie destination disaster . Build your house on the sand and when the storms of life come the house falls . See Joanne Novas climate change skeptics handbook . Very informative , If you handle snakes expect to get bitten , the great Ramm Chandera was bitten even though a very carefull man when handling snakes . Man made climate change is just not true , Carbon storage in soils is necessary to maintain water holding in the soil eg humis and should be part of every farmers list of best practices . I abhore how pollies hate subsidies then bring subsidies in through the back door . Once a mans word had value . No more .
Posted by Richie10 on 9/11/2008 5:04:44 AM
I've been a greenie all my life. I'm 64. So far the big changes I've spearheaded have been, inventing and installing the socker net style roadside litter bins and being a prime mover of the Mt Isa Rotary club's clean up of the Barclay Highway. (this was the insperation behind "Clean up Australia"). Started the push to introduce both grazing and a timber industry on costal grazing land. (Agraforestry) I mention these to demonstrate the fact I beliece in "doing" rather than "Undoing" or trying to destroy anything. (except the major political parties) Allowing government to introduce any type of carbon tax is the hight of folly. Both major parties are responsible for the mess Australia is currantly in. They will procrastinate on initating any real measures to reduce carbon and misuse these funds, as they do with pretty much all the public funds at their disposal. The only way a carbon trading scheme will benifet the environment is if people who either remove and store carbon by natural or mechanical means, get carbon credits to sell. This covers farm sinks either trees or crops, carbon capture and storage and power produced by means which produce no carbon. Exporters and local suppliers of Oil, Gas or coal must buy these credits and add the price on to their sale price. (two prices could be structured. Full on exports and a lesser price for local eseage) If that was addopted then Government would have to sell it's credits generated by forrestry and other arears held by governments for the cheeper price. This money generated would have to, by law, be spent on carbon and methaine removal projects. Just one example by which such a scheme could benifet both the environment and the pocket of an energy producer; say a hydro electric generator was built in the Snowey on the outlet to the Snowey River itself then the "environmental flow" of the Snowey River could be maintained, by producing clean energy and generating carbon credits to sell. I would argue that if such a carbon trading scheme was introduced, not only would it make Australia a world leader in reducing our CO2 output, but it'd make us all a lot of dough! Frank Brown
Posted by frank brown on 15/11/2008 3:52:30 PM
Remember the ozone hole 10 - 15 years ago? Remember "they" told us how the damage was already done and the hole was going to expand exponentially because of the CFC's we had already realeased? Remember how "they" told us plants would soon not pollinate, bees would die, almost all of us would have skin cancers and so would our animals? So I what has gone wrong? None of these catastrophes have occured - we never hear about the ozone hole anymore, my crops are still pollinating, there are plenty of bees in the garden, my cattle are better than ever. I seem to remember Ross Garnaut was one of those doomsayers.
Posted by Rusty on 16/11/2008 4:40:57 PM
The ozone layer hole hasn't gone away. This year's hole was the second largest on record. See www.ozonewatch.gsfc.nasa.gov

The Kiwis, being further south than us, are wearing the consequences. See www.theaustralian.news.com.au/story/0,25197,24651230-16953,0 0.html

The reason you haven't heard much about ozone depletion recently is because the world got together and produced the Montreal Pact to reduce production of ozone-depleting substances. Without the pact, it's estimated that the ozone hole would by now be up to 50 per cent larger.

Interesting that you mention bees. They are dying all around the world, and no-one is quite sure why. Just about the only theory that hasn't been raised is ozone depletion. See http://en.wikipedia.org/wiki/Colony_Collapse_Disorder#Climat e_Change

Posted by Matt Cawood on 16/11/2008 7:02:24 PM
Most of the worlds CFC's were used in the northern hemisphere - why do they not have a problem with their ozone? Yes Matt, bees are dying but not here in Australia which is supposed to be one of the countries most affected by the ozone hole - in fact we export bees to the northern hemisphere.
Posted by Rusty on 17/11/2008 6:52:59 PM
All I'm saying is Matt, one has to be very careful indeed when listening to "experts" spouting forth facts and figures and associated catastrophies. Many of them choose only to put forth what they wish other people to believe. If one does enough research one can point to any number of newspaper / science / economic articles to prove any argument from a number of angles. It is folly to assume one has an all encompassing knowledge of such complicated issues like global warming or ozone holes. I am very cynical about anything politicians get involved in. We here in the north of NSW are supposed to be suffering a continual decrease in average annual rainfall because of "Climate change". If one examines the figures back to 1881 it will be found rainfall, in our area, has increased from about 680mm pa to 720mm pa.
Posted by Rusty on 18/11/2008 9:21:29 AM
I would encourage all farmers to get involved in sequestering more soil carbon into their soils, it has very positive and beneficial effects that will increase their profitability. This is apart from being paid through a carbon trading scheme. You will be able to store more water in your soils and make more money. If they ever pay us for sequestering soil carbon, that would just be the icing on top of the cake. Remember, if carbon trading comes in you will be paying for it in your increased costs of inputs. So whether you believe the science or not (I don't) about man made global warming, it is in your interest to see measurement of soil carbon included as part of the scheme. Lobby hard, it's already measured in soils in the US and possibly Europe and farmers are being paid for it. Unless of course you make too much money from your land and one more source of income isn't welcome(!). I know what I'll be doing...
Posted by cynic on 20/11/2008 10:39:31 AM

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Matt Cawood is based in the NSW New England region and is the science and environment writer for the Rural Press group of weekly agricultural newspapers.

Q: Will farmers be better off if agriculture is included in a carbon emissions trading system?

Yes - selling carbon will make us more profitable
(23%)

No - carbon taxes will increase our costs
(46%)

Undecided - We need more information
(31%)

Total Votes: 574
Poll Date: 9/11/2008

11/12/2008 | Farm lobby groups will decide next week whether the future of farm representation will stay as it is or be broadened to bring in the big end of town.
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