In his opening address to this year's ABARE Outlook conference in Canberra, Mr Rudd said he is hearing more and more about the possible potential of enhancing the carbon stored in Australian soils.

Mr Rudd told delegates at the conference that while climate change poses significant challenges for Australian agriculture, it could also create opportunities for the nation's farmers.

He said climate modelling by the CSIRO and the Bureau of Meteorology suggests rainfall in southern Australia could be reduced by up to 10pc by 2030 and 20pc by 2050.

"This is why the Government regards our response to climate change as critical to the long term viability of Australia’s agricultural sector," Mr Rudd said.

"Our response to climate change globally will require an economic transformation in coming decades.

"We need to prepare for climate change, but we also need to be ready to seize new market opportunities that come with tackling climate change.

"Because as well as difficult challenges, climate change will create opportunities for agricultural Australia."

Mr Rudd said he gained an understanding of some of the opportunities presented by the potential of soil in a carbon emissions trading scheme during a visit to a farm near Roma last year.

"We discussed soil management practices on farms, and the scope for productivity improvements and reduced emissions from improving cropping practices," Mr Rudd said.

He said farmers argued that if Government wanted to do something about carbon emissions for agricultural Australia, it should focus on the soil.

"That is why today I am asking Tony Burke – as part of the Australia’s Farming Future initiative – to investigate how better soil management can be part of Australia’s response to climate change," Mr Rudd said.

"I recognise that this is a complex area and there is a variety of view points.

"I am told that there are significant challenges to measuring the emissions from different farming techniques and estimating the carbon stored in our soils.

"Those obstacles may make it difficult for soil carbon to play a role in our response to climate change, but we must examine the options.

"The truth is that, as in many aspects of climate change, we are only just beginning to look at soil carbon."

Mr Rudd said it is important the Government investigate how such practices might provide Australian agriculture with a role in new markets related to reducing carbon emissions.

SOURCE: Extract from ABARE Outlook report, to be published in Rural Press agricultural weeklies, March 6