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Tuesday, 8 November 2011
Page: 8477

Senator LUNDY (Australian Capital TerritoryParliamentary Secretary to the Prime Minister and Parliamentary Secretary for Immigration and Multicultural Affairs) (10:36): Mr Chairman, through you to Senator Colbeck, the reference is the Australian Bureau of Agricultural and Resource Economics and Sciences, or ABARES, Australian dairy financial performance of dairy producing farms 2008-09 to 2010-11 published in June 2011. It is worth making the point once again that the carbon price will not apply directly to agricultural emissions, including dairy farming, and the Carbon Farming Initiative will provide an opportunity for alternative income for dairy farmers who undertake projects to increase carbon stored in their landscape or reduce emissions by changing farm practices. The government is currently working with the dairy industry on methods to measure emissions reductions from on-farm production, methods which will generate CFI credits and that can be then on-sold into the carbon market. This is an example of the carbon market working as a positive for farmers.

Notwithstanding these measures, there may be some indirect impacts on dairy such as increases in electricity costs. It is important to keep these costs in context. ABARES has estimated that the electricity is about two per cent or 2.3 per cent of farm cash costs and Treasury's estimate of a 10 per cent rise in electricity cost means that this increase, as I said before, would mean about 0.2 per cent increase in cash costs. For food and beverage processors, the government has also set aside $150 million under the Clean Technology Food and Foundries Investment Program and this will allow dairy processors to reduce their energy consumption and reduce electricity costs.

The opportunities under the CFI for farmers, as well as funding available for dairy processors, will reduce the cost down the supply chain for dairy products. An additional Treasury modelling released on 19 September estimates that the carbon price will have an impact of 0.4 per cent on the consumer price of milk. And the government, as we all know, is providing assistance to households in managing the cost impacts on consumer goods. I did mention the assistance under the Jobs and Competitiveness Program for fertilisers such as urea.