What does carbon tax mean for veggie growers?

Wondering what the carbon tax announcement means for vegetable growers?  I’ve posted the initial response from Ausveg CEO Richard Mulcahy below. Ausveg is the industry’s peak lobby group and they say the government believes the public will be willing to pay a bit more for their food if it means a cleaner planet. Ausveg isn’t so sure and I tend to agree. Surely the current supermarket price wars show how dollar driven the food & grocery business already is.

People are regularly choosing canned and frozen veg over fresh, simply because it saves them a few cents extra. Of course only time will tell what the real outcomes are from the new carbon tax. Time will also tell whether the government financial modelling is right. Watch this space.

Ausveg CEO Richard Mulcahy says: “The Gillard Government announced the Carbon Tax to the Australian public today and the vegetable industry will wear a cost from these changes and also be exposed to new price increases from suppliers upstream.
The federal government has excluded the agriculture sector from paying a price on carbon as promised but has left the industry to fend for itself when we will be subjected to an increase in price from essential suppliers.
As it currently stands growers will not be asked to pay a price on carbon for their on farm activities such as fertiliser use and generator and tractors emissions. Fuel tax credits will also remain unchanged for the agriculture sector. The government has confirmed that heavy on-road transport (ie: semi-trailers) will be exempt from the fuel tax credit reductions until 2014-15. In 2014-15 the government intends to reduce the fuel tax credit to these vehicles. A Productivity Commission Inquiry will be conducted to look into what levels at which the fuel tax credit on heavy vehicles will be set.

Emissions intensive power plants are going to be closed or partially closed by the government with a replacement program to build cleaner power plants to be implemented. The Federal Government has admitted that this will lead to an increase in power prices but unlike the food processing sector which has had 150 million dollars allocated to it to change its business structures to more emissions friendly arrangements, the government has provided no such allocations to assist growers with changing their business practices.

The new arrangements are relying heavily on the uptake of the recently tabled Carbon Farming Initiative as a way for growers to sequester carbon into their soil in exchange for credits which can then be sold to polluting industries. The methodologies and fine details of how this scheme will work and apply to the vegetable and potato sector are still unclear. What is clear is that despite the hundreds of millions of dollars of funding into abatement technologies, carbon estimates, field extension officers and carbon brokering accreditation growers will be asked to front the expense of changing their business practices unlike other industries that are being assisted with this transition.

The government believes that any increases to the cost of production will simply have a flow on effect through to the customer and that they will be comfortable to pay more for food as a result of households receiving assistance packages to adjust to the tax. I have severe reservations about the general populace’s willingness to accept an increase in food prices as a result of a price being put on carbon.

I would welcome any feedback regarding the carbon tax and the arrangements that have been made for the agricultural sector to be sent through to myself or William Churchill, AUSVEG’s Public Affairs and Communications Manager through the email info@ausveg.com.au”