6.1
As demonstrated in Chapter 5, agricultural industries have asserted that a voluntary model has succeeded in improving land management practices and water quality in the Reef's catchment regions. To this end, the regulation of farming practices is not warranted and fails to address the underlying barriers to their adoption. These barriers include financial considerations, inadequate timeframes, and insufficient extension support. Reference was made to demographic issues and the complexity of applying best practice to multi-crop farming. These barriers are in addition to the agricultural industry's concerns about the underlying scientific basis for agriculture's impact on water quality (see Chapter 3). The banana and horticulture sectors were less critical of the scientific basis, and instead expressed concern about the Queensland Government's Reef regulations being applied as a blunt instrument across sectors, without considering varying risk profiles and the absence of evidence to link their farming practices to water quality issues. The committee also heard a range of views about the adequacy of the consultation process leading up to the release and passing of the Reef regulations.
Funding and costs to farmers
6.2
The committee heard that the cost of implementing best management practice (BMP) programs is one of the barriers to their adoption. The agricultural sector warned that associated costs would have broader economic implications for regional communities. The Burdekin District Cane Growers (BDCG) asserted although government funding is available for the administration of BMP programs or consultancy services, no direct funding is available to support farmers applying best practice principles on their properties. It emphasised the expense of applying best practice measures, and made reference to an example of raising the level of a 100 hectare paddock costing at least $1,000 per hectare. The Australian Cane Farmers' Association (ACFA) commented that 'farmers' profit margins are very constrained' and for this reason, it is 'very hard to be green if you're in the red'.
6.3
Despite the financial challenge of implementing BMP programs, the sugarcane and grazier industries recognised an alignment between economic and environmental incentives. AgForce pointed out that producers are naturally inclined to improve the condition of their land because it would improve the economic viability of their enterprise. Canegrowers and the BDCG stressed that farming practices aligned with environmental outcomes because it's in their economic interest to retain fertilisers and chemicals on their crops and maintain soil quality. Canegrowers stated that the industry's environmental credentials are 'acknowledged as some of the best, if not the most, environmentally sustainable farmers in the world'. For this reason, there is an alignment between environmental and economic incentives that drives practice change from within industry.
6.4
The absence of funding to support farmers and the alignment between environmental outcomes and farming practices was also raised by the Australian Banana Growers' Council (ABGC). It commented that the government failed to provide money to address sedimentation issues, despite farmers not wanting to lose their soil. Reference was made to projects established 20 years ago through reef trusts to conduct bank stabilisation, which according to the ABGC is missing from support measures in place with the Reef regulations.
6.5
Other concerns about the cost of implementing best practice measures under the Reef regulations package were shared with the committee. The BDCG made reference to the Queensland Government's regulatory impact statement. It was estimated to cost primary producers $120 million per year and $142 million in capital costs, as well as any additional maintenance costs. According to the BDCG, these costs are a 'huge impost on primary producers' and 'is not conducive to growers being able to improve their farming practices'. BDCG spoke of the lack of balance between the costs imposed on producers and financial support provided by government, which amounted to $13.8 million over a four-year period. The ACFA noted a failure by government to model how the farming community would make up for the loss. The Queensland Farmers' Federation submitted that historically, for every dollar invested by governments into voluntary water quality programs, farmers invest on average approximately $1.60.
6.6
In response to the Reef regulations, Canegrowers commission the Nitrogen management in the Queensland sugarcane industry: The economic risks of policies that prescribe nitrogen rates below industry guidelines (Economic risk report). The report found that over a ten year period, the industry would lose $1.3 billion if nitrogen application rates on sugarcane crops were reduced by 30 per cent below industry best practice levels. Canegrowers explained the modelling used to determine the report's findings:
One is the empirical impacts on yield. We've used some fairly standard models that are available in the industry. That is, you can map the rise and fall of yield by changing one of the parameters, such as nitrogen. We are not exaggerating…that you will go down five to seven tonnes of cane per hectare. That's not a lot but, in a macro sense, that adds up to two million tonnes of cane. Simple mathematics give you the annual cost of about $110 million of lost opportunity for industry revenue…We then modelled the economic impacts and we think that lost opportunity of $110 million brings about an economic loss to the regions of about $160 million. So, over 10 years, it's 1.3. We've actually discounted it. We think that, obviously, these regulations are going to have costs. We've not factored in that people are leaving the industry. We left that out of it. We just had a look at the empirical impacts on yield, plus the regional multipliers.
6.7
The committee questioned the report's findings and its connection with the Reef regulations because of the advice the Department of Environment and Science (DES) provided that the regulations do not require a 30 per cent nitrogen reduction. In response, Canegrowers stated:
The regulations require the grower to move towards a water quality target. The regulations would be fruitless if they didn't follow the modelling that they used, which was a 30 per cent reduction in nitrogen rates. So that's what the regulations were designed on—that's the modelling behind the regulations. If they weren't using that then they would be pointless.
6.8
The BDGC pointed out that the cost imposed on farmers by the Reef regulations would ultimately be paid for by consumers. This view was shared by Growcom, who said it was unsustainable for agriculture to continue 'to absorb the costs of environmental regulation'. It argued environmental protections should be 'put to the public, that if they want results for the environment then they've got to be prepared to pay for it'. Growcom called for agricultural subsidies, similar to the Common Agriculture Policy of the European Union or the Farm Bill in the United States, to provide 'financial incentives for growers to improve their practices that will lead to improved water quality outcomes'.
6.9
The committee sought advice from the DES about the costs of the regulations on producers, based on the Queensland Government's Broadening and enhancing reef protection regulations, and the regulatory impact statement (RIS). These assessments found the gross cost of the regulations to be $783 million upon the Queensland agricultural sector, with a capitalised value over ten years to be $783,251. The committee questioned the cost per operator, based on the Explanatory notes of the Act, which stated '[t]he number of operators caught by the new provisions will expand from approximately 3,300 to 13,000'. The committee estimated the average cost per grower over ten years would be $38,000; however, on notice the DES advised that this figure was an overestimation because the RIS included 'costs and benefits of regulatory proposals that were not adopted and will not be implemented'. The variation between the net costs associated between consultation RIS versus the decision RIS are outlined in Table 6.1.
Table 6.1: Costs and benefits to agriculture outlined in the Consultation RIS compared to the Decision RIS
|
|
|
|
|
Costs to agriculture—present value costs ($) over 10 years
|
783,251,024
|
536,609,628
|
|
Benefits to agriculture— present value costs ($) over 10 years
|
355,427,514
|
285,188,661
|
|
Net costs to agriculture ($) over 10 years
|
427,823,510
|
251,420,967
|
Source: Department of Environment and Science, answers to written questions on notice, 28 July 2020 (received 25 August 2020).
6.10
The DES added that the 'RIS does explain that the impact will be variable across farmers. So farmers that are complying will not have such an impact', such as those sugarcane 570 growers accredited against the Smartcane BMP, and others will have higher costs based on individual actions required under the regulations.
6.11
When asked whether the Queensland Government would provide compensation to farmers to meet this cost, the DES responded that it had not, 'but it has a $10 million reef rebate scheme to allow for agronomic advice to meet the reef [regulations]. It also funds, and has funded, $120 million worth of programs in the agricultural sector to help meet those standards'. Some of this funding would be used to provide support services to farmers to 'make the decision they need to make the most cost-effective implementation of the regulations'.
6.12
The DES did not provide comment as to whether the primary concern held by farmers about the regulations is due to the financial burden upon each operator, rather than it being a matter of poor communication.
6.13
Concerning the estimated cost of $1.3 billion to the industry with a 30 per cent nitrogen load reduction, the DES believed that figure came from a combination of targets in the Reef 2050 WQIP and 'the assumption that agriculture, through the regulations, will be required to meet those targets by themselves'. The DES clarified that different scenarios and modelling had been used to inform the design of the Reef regulations, but:
…where the regulations landed was maintaining the links to that SIX EASY STEPS methodology, industry's own standard, and there is no requirement to reduce fertiliser by any amount. The requirements and the regulations are a process for calculating your nutrient inputs. They aren't a mandatory amount of nutrient input at all.
6.14
The DES added that while the assumptions within the Canegrowers' Economic risk report 'are valid as a hypothetical scenario of what could happen if that was to be the case, but that is not the law that was made last year' and no changes will be made to the regulation due to the Queensland Government's five year commitment.
6.15
Although farmers had not received direct funding to implement BMP programs, the committee heard that even if funding was made available, cane groups would maintain their objection to any form of regulation. Canegrowers made clear of its opposition stating:
The regulatory model for this challenge—whatever the challenge might be, whatever the size and the proportional risk of the challenge—is a bad idea. It disincentivises farmers, regardless—it's not about being paid off to comply with regulations.
6.16
Rather than support farmers with BMP adoption, Canegrowers argued the regulatory model 'disincentivises farmers from actually being proactive about environmental sustainability'. The rationale for this view is due to farmers feeling:
…completely trapped. You've got someone in Brisbane, down in George Street, who's writing it. It's three centimetres thick, telling a farmer how to actually run their farm. It's crazy. It's codifying farming. What it's doing, not only for the cane industry—because, we have to say, this is now across every industry across the coast in Queensland. It's now codifying farm management practice for all of those industries, which means that it doesn't enable a farmer, who's the one who's actually making the decision, to manage all the risks and the drivers for sustainability. It's a really bad idea to regulate to that level of detail, because it has to be black and white...you're much better off engaging people outside a regulatory model to actually enable them to look at their own system and try and work out how they can do a better job every time they make those decisions.
6.17
Canegrowers recommended that the 'inquiry should expose the inability of regulations to drive meaningful changes to farming systems'. Whereas WWF-Australia argued those farmers and peak bodies that 'have made a business decision not to participate' in programs to support the adoption of BMP have been 'free riding' on the efforts by those farmers who have invested in BMP adoption and are undermining 'the effort and investment paid by their peers'. It is for this reason that WWF-Australia supports the Queensland Government's regulations.
Extension services
6.18
The committee heard calls for further investment into extension support for growers, with various agricultural representatives expressing concern with existing support offered. Growcom spoke of the inadequacy of extension officers available to support practice change in the agriculture industry. Whilst much of its Hort360 platform is online, its members still require in-person visits. For this reason, Growcom called for further investment to fund additional extension officers, beyond the two currently employed under Hort360. Growcom also referenced historic Australian and Queensland government funding to promote practice change, which 'was demonstrated to have worked'.
6.19
The ABGC also highlighted the need for more extension officers:
For bananas the key issue is extension, and we've said this to the Queensland government all along. We do have high uptake, but extension with farmers is what we need. Because our engagement with government has not been as long as that with the sugar industry, we haven't had a lot of extension, so we need more extension. To my knowledge, DAF, Queensland, don't even have an extension officer dedicated solely to the reef. Unless you have a project that's funded, you don't get extension, and I think that's a mistake.
6.20
AgForce made reference to the need for extension officers, but this concern came secondary to the need for genuine partnerships across industry, government and the scientific community.
6.21
The committee was also advised of inadequate extension services in regional areas. Canegrowers Tully said the only time the region had extension officers visit was to inform them of further regulations, and that 'no real help whatsoever' had been provided by extension officers before that time. Canegrowers Burdekin said its members only engage with them when checking if they're 'not breaking any laws' and agreed that there was no proactive development of outcomes based operations.
6.22
The DES addressed these concerns about extension services. It reported that funding associated with the Reef regulations package included funding for 42 extension service positions within the Queensland Department of Agriculture and Fisheries (DAF) and other organisations such as natural resource management bodies. In addition, DES detailed the array of extension services on offer to the agricultural sector within the Reef catchment regions:
Extension services are actually provided across the reef catchments in a wide range of organisations, ranging from industry associations through to private agronomy associations. The Queensland program has trained 335 extension practitioners across 80 organisations in reef catchments in the past month to assist farmers to meet water quality standards. The program also funds programs such as: Smartcane; horticulture and banana BMPs; nutrient management planning programs in the Burdekin, Burnett, Mary, Mackay, Whitsundays and wet tropics; grazing projects which assist graziers to identify and improve land conditions; and the major integrated projects, which have been the subject of some evidence in the past couple of days as well. Most of these programs include extension agronomy or advice services. There is also a $10 million reef rebate scheme to assist farmers to specifically obtain agronomic advice to assist in meeting the regulatory requirements.
6.23
In addition, the DES directly finances extension officers within partner agencies, industry groups, private suppliers and NRM bodies to deliver support services. In total, 70 positions are funded for industry-based extensions and practice projects across the Reef's catchment regions.
6.24
The Australian Government also supports extension for farmers through its Rural Research and Development Corporation, which in the 2018–19 financial year invested more than $800 million, including $300 million of Commonwealth matching funding, aimed at improving productivity, productivity and sustainability within Australia's agricultural industries.
Timeframes
6.25
The timeframes associated with practice change and implementing Smartcane BMP across the entire sector is a major point of contention between the sugarcane industry and the Queensland Government's rationale for the regulations. The sugarcane industry asserted that accreditation takes time, but accreditation rates are progressing and meeting anticipated timeframes. Canegrowers submitted that there is no evidence that a regulated approach would result in 'meaningful practice improvements in farming systems' and the uptake issues under a voluntary approach were due to its design, implementation and the short time frame (two to three years), which is:
…far too short for development of the trusted relationships needed for complex farming system changes. Ten-year commitments are required. Based on what we have seen in the plans of the Reef Trust Partnership, this problem will persist. We cannot expect better outcomes when we simply repeat past mistakes.
6.26
The BDCG explained that 'accreditation doesn't occur in a very short space of time' because of such steps as auditing processes and the redesign of farm paddocks. Further, sugarcane being a perennial crop with a five-year cycle means any changes made to a paddock can take years to be implemented.
6.27
The committee also heard that Canegrowers did not support the water quality targets and the timeframes stipulated under the Reef 2050 WQIP because they are 'clearly unattainable'. A point of view shared by Canegrowers Proserpine, which said growers felt that water quality targets are 'unrealistic and possibly unachievable given the time frames imposed'.
6.28
Whilst the committee heard objections to the timeframes and targets established by the Reef 2050 WQIP, others were supportive. The Independent Science Panel commented that it was comfortable with the targets because of the research conducted to inform them. It referenced AIMS research that looked at the response of corals to different levels of nutrients, which was subsequently used to establish load reduction targets in 2017 to have a satisfactory impact on reef health.
6.29
The Independent Science Panel also emphasised that the targets are not seeking to return water quality to a pre-development situation, rather to 'halve the doubling of total nitrogen coming down those rivers'. The Independent Science Panel added that development, including agriculture, has been occurring from 100 to 150 years and for this reason, 'the solutions are not be underestimated' and the regulations 'are an attempt to encourage widespread adoption of industry best practice among the major industries'. The Independent Science Panel also recognised that it 'takes a lot to turn the ship around'.
6.30
The 2017–18 Reef report card recognised the issue of the timeframes associated with implementing new farming practices with long production cycles. It noted that the report card 'describes adoption progress based on the degree of management improvement reported' by Australian and Queensland government projects and programs and 'these are mainly management changes that have been more rapidly implemented due to a level of fiscal subsidy and technical support'. It recognised other ongoing programs, with many occurring on longer time scales; however:
This process of engagement, and follow-up interactions to enhance knowledge and skills, is generally not included in Report Card estimates of best management system adoption, or in modelling conducted to estimate pollutant load reductions. These are the outcomes expected from these programs, but learning new knowledge and skills takes time, and implementing new practices in farming systems with long production cycles (such as sugarcane and beef cattle) is not immediate.
Consultation process
6.31
A concern expressed by various agricultural stakeholders regarded the Queensland Government's consultation process in the lead up to the development, release and passing of the Reef regulations package. Canegrowers Burdekin confirmed the region had undergone a consultation process, but added that it was inadequate and that the 'decision was made before the process took place'. Canegrowers Herbert River detailed the nature of the consultation process in its region with 'local consultation on the ground was only held once in the final stages of the regulation [and] was done to tell us what was going to happen. Locally we didn't have any real input at all'.
6.32
Contrary to the view of inadequate consultation, the committee heard of extensive consultations occurring prior to the formulation of the Reef regulations. These consultations included an extensive 18-month consultation process by the Great Barrier Reef Water Science Taskforce (the Taskforce) that was tasked to provide advice on how to achieve water quality targets and identify priority areas for investing an addition $90 million (over five years).
6.33
A further three-year consultation process was conducted by the DES, which included an agricultural stakeholder advisory group comprising of representatives from Canegrowers, AgForce, Queensland Farmers' Federation, Growcom, Sugar Research Australia and Meat & Livestock Australia. In addition to industry consultations, the DES conducted multiple public consultation rounds, which included two consultation periods for the regulatory impact statement. This agricultural stakeholder advisory group was also included in the writing of the regulations, and were issued with an embargoed draft copy of the regulations before they went to the Queensland Parliament. Agricultural groups were also consulted as part of the Queensland Parliament's inquiry into the Reef regulations package.
6.34
Whilst acknowledging the DES had not spoken with everyone, it argued that it had listened to stakeholders' feedback with the drafting of the regulations:
…during that consultation process the proposed standards, which the government ultimately adopted, changed significantly with the evidence that was provided by people on the ground about what was practical and what would work. That is why the standards align with industry best practice standards. There were early drafts, and they get referred to sometimes, including through that consultation RIS. You can have a look at the standards that were produced in the consultation RIS. They look very different to the standards that were made by the government in 2019.
Committee view
6.35
Concerning the barriers to the adoption of best practice by the agricultural sector, the committee recognises the cost impost is primarily carried by farmers when implementing best practice. Although applying best practice costs primary producers, the committee also recognises that its application has a financial benefit—estimated to be over $285 million for the entire agricultural sector over 10 years.
6.36
Based on the evidence provided by the DES, the overall net cost to the agricultural sector operating within the Reef's catchment regions is approximately $251 million over ten years.