Farmers, the key suppliers of the cash-strapped carbon market, were nearly forgotten until Australian Farm Institute executive director Richard Heath went on air. During the first day of the Carbon Farming Industry Forum, there was enough to cope with, including charges of corruption, a market fall, and new government measures. The politics began right away, with host and CEO of the Carbon Market Institute John Connor criticising the agriculture minister’s newly-acquired veto authority over native forest rejuvenation projects that take up over one-third of a farm. Emissions, Industry, and Energy Professor Andrew Macintosh’s fears about the system’s integrity were unfounded, according to Angus Taylor, who came out blazing early in the morning, telling the 161-member crowd that the market was strong and expanding and that the market was robust and growing.
If Labor is elected, Shadow Minister Chris Bowen has vowed a comprehensive assessment of the system and its integrity. The number one restriction, the supply of carbon credits, was not discussed until AFI’s Richard Heath spoke. Mr Heath stated, “I’m really going to bring it back to the ‘farming’ part of carbon farming.” Mr Heath claimed that increasing carbon levels made farming systems more resilient, with richer soils and higher water storage capacity, lowering vulnerability to hazards such as climate change. Then, after a brief pause, he added a large ‘but’.
Mr Heath stated, “I think farmers need to be cautious at the present,” adding, “I don’t think there is the same level of urgency in deciding what to do with any more carbon that may be generated from that urgent need to embrace carbon-friendly farming practises.” He noted that due to uncertainty, the nascent condition of markets and potential, selling carbon credits now was a risky proposition. Mr Heath predicted that entire supply chains will soon be held accountable for their carbon footprints, and that agricultural firms could need to use any new carbon to meet consumer demands, which would negate any gains from selling carbon on still-uncertain markets. “To be honest, it’s way too early to make that call right now,” he remarked.
Risk management tools, according to RegenCo CEO Greg Noonan, would help to alleviate those fears. “An imbedded option in a contract that effectively said, ‘Every year, I’ll decide whether I sell my ACCUs to the market or use them to offset my own emissions,'” he said. Farmers might avoid low-cost carbon markets by entering into specialist arrangements with large banks, according to Market Advisory Group managing director Rahpael Wood, which would assist to mitigate volatility. He explained, “I’ll negotiate a buyback agreement with the bank, collect the cash now, do something with it, buy it back later, and take advantage of markets.” “Those things will happen, and they are already happening.”
Naomi Wilson, environmental manager at the Australian Agricultural Company, provided a farmer’s perspective, saying that the carbon market posed significant hazards to farmers. “Being a farmer requires a certain level of expertise and a willingness to take risks,” she explained. “One of the things that I believe we need to build is farmers’ awareness of carbon as a commodity in the same way that they understand all of the other basic commodities that they produce,” says the author.
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