VERY few Central Queensland cattle producers are likely to participate in a carbon trading scheme until there is clarity on trading rules and contract frameworks.
Department of Employment, Economic Development and Innovation agricultural economist Rebecca Gowen was commissioned by the Fitzroy Basin Association Ltd (FBA) to work with graziers to investigate carbon trading opportunities and risks for beef producers.
Ms Gowen said the results of the project certainly highlighted a lack of understanding by landholders of the economic implications regarding the use of carbon offsets.
Working in conjunction with FBA, Agforce and DEEDI extension officers, seven workshops were held across Central Queensland involving 126 grazing business participants representing the predominantly brigalow and silverleaf ironbark eucalypt grazing lands.
During the workshops participants were presented with details of a case study property and asked under what price and contract conditions they would forgo cattle production to sequester carbon.
“Bid cards and the rules for the ‘mock’ carbon auction were fully explained and scenarios were set based on 20 year contracts for sequestration in regrowth,” Ms Gowen said.
“Participants were also given an overview of the Carbon Pollution Reduction Scheme and provided with the same level of information relating to carbon trading policy, risks and opportunities,” Ms Gowen said.
Prior to the auctions a desk-top study calculated that at carbon prices of greater than $20 per tonne it was profitable for beef producers to become involved.
When tested in the auctions, however, at $20/tonne, only 26pc of producers on the more productive brigalow country indicated they would enter the scheme and this fell to 15pc of landholders on ironbark land types.”
Ms Gowen said comments recorded by participants at the auction highlighted concerns over the length of the contract; the possibility of rules changing in the future once contracts were signed; and the liabilities associated with losses due to fire. Ms Gowen also said that the numbers of businesses involved indicated a high level of interest from beef producers wanting to understand how emissions trading schemes may impact on their businesses.
Ms Gowen has recommended that the focus for future should be to assist landholders with the estimation of on-farm emissions and sequestration potential relevant to the Fitzroy Basin.
“All parties will need a better understanding of how accounting and trading rules will affect the ability of Central Queensland landholders to supply carbon offsets,” she said.
“In addition, they need a reliable information source on current voluntary carbon trading schemes, how they work, the advantages and disadvantages of each and the prices at which carbon is being traded under different rules.”
Ms Gowen said the outcome from the economic analysis suggests there is an opportunity to diversify income. However, the structure of the carbon reporting framework used to measure and report carbon emissions from agriculture will determine participation rates and influence bid prices.
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