AU: Growcom report shows impact of carbon price on horticulture
Mr Combet was quoted as saying that "farmers are entitled to pass on cost increases caused by carbon pricing, because that's the way the economy is supposed to work" (to read the article (ABC News) click here)
Growcom Policy Manager David Putland said that claims that farmers could simply pass the costs on is not the economic reality faced by most farm businesses that have to accept prices set by the market, and that are often manipulated by the major players.
Growcom has today released a report outlining the impact of the carbon price on fruit and vegetable growers.
The report presents the first detailed economic modelling of the carbon price in the horticulture sector, which has been ignored in other analyses. It draws together the results of a project which included economic modelling of six case study farms to examine how the carbon price will flow through the supply chain and affect the farms’ bottom lines.
Mr Putland said the results were a wake-up call for both growers and policy makers.
"While agricultural businesses aren't directly involved in the carbon price mechanism, they will be affected by increases to the costs of important inputs – such as electricity, fertiliser, chemicals and packaging," Mr Putland said.
"For the six farms studied, the carbon price will increase farm input costs by between $5000 and $42 000 per year in 2012, which equates to between 0.3 and 0.8 per cent of gross farm income. By 2020, input costs may have increased by between about $7000 and $56 000, or up to 0.94 per cent of gross income," he said.
"Given the typically low profit margins of most fruit and vegetable farms, these cost increases represent a significant reduction in farm profits. Of the six farms used as case studies in this report, three were already operating at a loss during the period of analysis."
Mr Putland said that as expected, the largest impact on fruit and vegetable farms would result from the increased cost of electricity (estimated at about 10 per cent) which powers cold storage facilities on farm and irrigation.
"Some larger fruit and vegetable producers are facing increases of several thousand dollars per month, solely as a result of the carbon price. Of course, electricity prices will actually increase by considerably more than that because of other factors in addition to the carbon price," Mr Putland said.
"Most growers will be unable to pass these increased costs on because they have little control over the prices they receive. While the Government has provided assistance measures to households and polluting industries, there is relatively little assistance available to growers."
The report also includes information on how growers can minimise the effects of the carbon price on their businesses. To assist growers to assess the impacts on their businesses, the project also created a farm carbon price calculator that can estimate the cost increases based on simple farm budget data.
The report and calculator are available on the Growcom website at www.growcom.com.au
For more information:
Dave Putland
Growcom
Tel: +61 7 3620 3844