ENERGY TAX ANOTHER HEAVY BLOW ON FARM MARGINS

THE Queensland Farmers’ Federation said today that intensive farming systems in Queensland were highly exposed to new and increased costs that would hit as a direct result of the carbon tax announced at the weekend.

“Ultimately, the carbon tax and the subsequent carbon trading scheme will increase the costs for almost all the energy inputs which are so important for running efficient and sustainable farms,” QFF President Gary Sansom said.

“Producing food and fibre requires the conversion of energy, specifically with diesel, fertiliser, and electricity. Farmers know that their costs of production are directly hitched to the cost of energy.

“The result from an increase in these costs is undeniable. It will become more difficult to run a profitable farm in Queensland, no matter what commodity a farmer is producing.

“We acknowledge that the sector is exempt from direct emissions and that the government has said that agricultural fuel won’t have its tax credits cut. But our point remains the same – the carbon tax will have a significant impact on farmers and food and fibre value chains.”

Mr Sansom said farm margins were under increasing pressure and were already extremely tight, and that the new tax would add another pressure.

“Our farmers are always driving for greater efficiency. But the reality is that a lot of efficiencies have already been gleaned within modern farming systems and there is little room for farmers to keep supplying cheaper food. Ironically, achieving greater efficiency likely means the use of more technology, which usually means even heavier reliance on energy.

“The addition of this impost will squeeze the sector further. The result is two possible outcomes. The first is an increase in the cost of farm produce and that these costs are passed down the value chain and hit consumers at the check-out.

“The second – because of the way our value chains are structured – will mean that farms will go out of business, where there is little opportunity to pass on the cost.

“Either way, the carbon tax creates an economic challenge that will hit both regional economies and consumers.”