Every good farmer knows the numbers, the dollars, of their operation.
Dan and Bec Reardon just east of Moree are very good farmers. So in December last year as a bus load of our nation's Agricultural Ministers stepped onto a drought effected paddock the Reardons started explaining what they do. They talked about the costs down to the cent for management of zero till cropping, for sheep feeding operations, and for the tree corridors they have planted. Down to the cent.
The reality is the Reardons are like most Australian agricultural producers. They progressively adopt best practices in production as their capital allows. They're planning for drought and anomalous weather conditions within the commercial realities. And they're doing work like their tree planting that benefits their own farm in terms of production, but which also benefits the entire Australian community. They are providing a service, an ecosystem service, that has benefits to the bioregion, to the country and indeed (via carbon sequestration) to the whole planet.
This "freebie" they have been gifting is called a positive externality. In economic parlance its defined as "when production of a good causes a benefit to a third party". They produce cereal and pulse crops and wool and sheepmeat and as a result also give these environmental benefits to the whole country. These external services are very diverse but important ones can be measured, and valued. But the vast amount of agriculture's positive externalities are deliberately not being recognized, ie no recompense for farmers.
There's another farmer I know west of Moree who has decided the current freeloading has gone too far. In June last year Rob Houston filed a High Court claim, in a David and Goliath battle, for "just terms" compensation as a test of property rights. He claims land-clearing limits were imposed as a result of an "Australia clause" negotiated under the Howard Government, which allowed Australia to use avoided land clearing to meet its Kyoto targets. There is a very strong case being made that may change the entire framework of vegetation laws.
After AGMIN members heard the Reardons, Ministers Littleproud and Marshall outlined the current suite of incentives for landholders that are essentially finding the middle ground. The NSW Biodiversity Conservation Trust (BCT) is a $5.4 million dollar first step, as is the federal government's $30 million dollar ecosystems services pilot that will likely integrate with the BCT. NSW Farmers committees are already trying see how this could happen when the EPBC review gets busy this year. They are rightly wary of some of the major flaws in the systems, and the risks. There are some worrying BCT exemptions for non-ag developers now, and if they are repeated in the EPBC then farmers again will be footing the bill.
Also on the AGMIN tour was NFF President Fiona Simson who spoke about the recent KPMG report that has identified key commercial frameworks, and may begin to set pathways for institutional investors to create commercial incentives for farmers. NFF targets 5 per cent of farm income by 2030 in its 2030 roadmap, that $5 billion a year, every year.
So this is a space where the ideas and legislation and investment concepts are starting to take off. Economic theory might become reality. There is real scope for environmental or carbon sequestration works to become a significant income stream for many farming businesses.
But every good farmer knows the numbers, the dollars, of their operation. And you can't be green when you're in the red.
So there are some huge hurdles for this to work. If the amount of funding, or the costs of entry, don't make real commercial sense? If the legislation around land management is too costly or if unfair advantages are given to non-ag sectors that remove biodiversity (think housing or mining)? If farmers have to choose between Carbon sequestration and Biodiversity but can't claim recognition for both? If state and federal systems aren't integrated with a one stop shop. If caveats restrict future land use options?
Then the wheels will fall off. These concepts will be seen as farce.
If farmers don't see viable commercial opportunities that are simple to access and make sense on today's spreadsheet we can't and won't participate.
Carbon is a key factor in this space. I've been managing our family's cropping operation for a decade and I explained to the AGMIN group that in that time we have kept breaking records for heat and dry (and wet!) months, and years. As I did, I could see a few MPs stiffen. Whatever the politics, climate change is indisputably playing a factor in changing our management, practices and profitability here. Trends are becoming clearer, as is the causal link. Banks, insurers and agronomists are all responding commercially.
The fact that agriculture (and our world leading practices) here are a huge part of the solution to climate change is something that even the skeptical can see opportunities in. We provide a huge uncompensated positive. If the Houston case forces a new precedent, or if Government Carbon Solution Fund (CSF) policies can help us be remunerated for these practices then there is a real commercial opportunity that certainly helps mitigate some of the huge long term impacts. Making the Carbon Farming Initiative have non least cost abatement criteria to allow forestry and biodiversity plantings is one very low hanging fruit that could be done quickly, as just one example.
2020 is a year when, after decades of discussion, some of these massive issues will be decided. The role of commodity groups, state farmer organisations and the NFF is paramount. Farmers must get into this stuff at the grassroots. Government willingness to listen and respond is key. But hopefully in what will be a wetter year than the last few disasters, we might finally see some real changes that benefits the environment, people and agriculture in a real and tangible manner.
Moree Plains Shire, when not in this unprecedented drought, has the highest Gross Value of Agricultural Production of any Australian local government. The impacts of the 2018-19 drought are getting even worse in early 2020. Lets hope, with rain and political pressure, that Moree's farmers, like the Reardon and Houstons, can rise again but in the future start including payments for environmental stewardship on their balance sheet.
- Oscar Pearse is a family farmer at Moree and Principal of Regional Policy Solutions, a member of NSW Farmers Native Vegetation taskforce and AFI Research Fellow.