Carbon tax spells rising costs for horticulture in Australia

Peak horticulture organisation Growcom today said an initial examination of the Australian federal government’s carbon tax scheme showed that it would put further pressure on farm margins with increases in input costs such as electricity, fertiliser and chemicals.

Chief Executive Officer Alex Livingstone said estimates showed the cost of electricity would go up by about 2.5c per kWh which would have repercussions for all horticulture growers and especially those who run pack house operations including refrigeration.

Growers would also be likely to see increases in the cost of fertilisers and chemicals.

Mr Livingstone acknowledged that agriculture’s direct emissions were excluded from the scheme so that horticulture growers would have no direct liability for on-farm emissions.

He also welcomed the fact that liquid fuels used in agriculture would not be included.

“Growers will be shielded from increases in carbon price on fuels (including diesel) and will continue to receive full fuel tax credits,” he said

“In addition, heavy road transport is out until mid-2014 which means freight costs will not be affected by this development until then. After 2014 we estimate freight costs will increase by about 1-2 per cent.”

However, Mr Livingstone said it was difficult to identify any cost-effective offset generating activities applicable to fruit and vegetable farms under the Carbon Farming Initiative and warned there was too much reliance on this scheme by government to deliver compensation to rural industries.

He said the industry would continue to lobby for direct compensation for horticulture growers since as price takers they would have limited ability to pass on costs down the supply chain.

In addition, consumers were unlikely to be willing to pay higher prices for fruit and vegetables as a result of the scheme.