The Australian Government’s recent mandatory carbon emissions reporting scheme is set to heavily impact farmers when it comes into effect on 1 January 2025.
New Carbon Emissions Reporting Scheme
From 1 January 2025, many large Australian businesses and financial institutions will need to prepare annual sustainability reports containing mandatory climate-related financial disclosures.
This initiative, which is expected to involve at least 1,800 large firms, aims to address climate change by requiring companies to report on their carbon emissions and climate-related risks.
According to Treasury, the scheme is designed to “appropriately price climate-related risks and opportunities” and document companies’ actions to “meet their climate change targets”. It will eventually require firms to report not only on their direct emissions but also those throughout their supply chain.
The looming changes have raised concerns across the agricultural sector, with compliance costs and potential impacts on consumer prices potentially skyrocketing.
Cost Concerns Raised Across Sector
The exact cost and impact of the mandatory reporting is unknown at this point, but it’s been estimated at $2.3 billion for the first year alone, with the National Farmers’ Federation (NFF) warning that these costs will be passed on to consumers.
While the Australian Accounting Standards Board has yet to clarify the real-world implications for the agricultural sector it’s clear that banks, insurers, suppliers and customers will need data from farmers for their reports.
In a recent interview with The Advertiser, Nationals Federal Leader, David Littleproud warned that the enormous financial burden couldn’t be absorbed by farmers, saying: “It means prices have to go up. No one can absorb that. That has to be passed on.”
“ … It’s the financial burden for farmers from all scales that are going to have to comply with this legislation. This is an ongoing cost that is just adding more cost to the end consumer,” he said.
“This is where the uncertainty is. This is where it’s unnecessary and no one else in the world is doing it bar Australia…”
Similar Schemes Scrapped in Other Nations
Mandatory reporting schemes similar to this have been proposed in other Western governments, with the United States outright rejecting one.
Mr Littleproud pointed out that the measures imposed in Australia go beyond similar schemes in the European Union, Canada and the United Kingdom.
Our neighbours, New Zealand, as recently as June vowed to scrap a tax on livestock methane emissions, insisting climate change obligations could be met without “shutting down Kiwi farms”.
Backlash from Kiwi Farmers Amid Proposed Carbon Tax on Livestock
Farmers Speaking Out About Burden
Nationwide, farmers have begun speaking out about the burden of the scheme.
York Peninsula farmer, Elden Oster, is part of a farmers’ group campaigning against the scheme. Speaking to The Advertiser he noted that the scheme would trigger “extra red tape reporting and cost on food production”.
“We’ve got more red tape, more bureaucracy, more experts telling us what we can and can’t do. And now the carbon space is going to cripple the mindsets, the mental health and the capacity of farmers to have to do mandatory reporting…” he said.
“It’s time for the Australian Government and the Australian people to realise that we are growing food, and some of the best food in the world, to feed the world and to feed our great nation – and you can’t eat carbon.”
NFF President, David Jochinke, said that while the scheme would undoubtedly lead to more red tape and higher costs, the “full extent of the burden remains unknown”.
“Farmers are increasingly frustrated by the rush to implement lofty green goals without considering the practical impact on small farming businesses,” he said.
Mr Jochinke noted that once the full impact is realised, the NFF will work with the supply chain to ensure farmers aren’t “disproportionately lumped with excessive reporting and compliance costs”, adding that farmers needed to receive support to implement the scheme.
Information on the exact ramifications of the mandatory climate disclosure regime is unknown yet, however, more information on compliance can be found through ASIC and BDO.
Sources: The Advertiser