DAIRY farmers are being urged to consider carefully before committing to long-term agreements around carbon credits, with a number of Dairy Australia tools available to help make the right decision for your farm.
Carbon and biodiversity markets have been developed across the world as a mechanism to incentivise emissions reduction or carbon sequestration across industry, including agriculture, giving farmers an opportunity to realise the value of their environmental stewardship.
Farmers are also increasingly needing to reduce on-farm emissions to meet industry and supply chain emissions reduction targets, community, insurance and finance market expectations.
In Australia, the federal government's Emissions Reduction Fund (ERF) is the mechanism for developing carbon markets.
The fund includes several 'methods' to allow farmers to either reduce or sequester carbon emissions and be paid for doing so.
Recently developed methods of relevance to dairy include animal effluent management methods and soil carbon method.
The federal government also recently passed a Bill to establish a Nature Repair Market.
While details are not yet available, this is intended to reward landholders, including farmers, for the ecosystem and stewardship work that they do on their properties.
These programs will continue to evolve in the next few years as methods are tried and tested and trials are completed.
As well as these Australian programs, there are a range of international schemes that Australian farmers can enter, including The Gold Standard and Verified Carbon Standard.
These different schemes all have different participation and auditing requirements.
'Communicate with your processor to ensure you understand their plans for reducing supply chain emissions as this may impact on your plans for any credits you generate on farm.'- Megan Hill, Dairy Australia
While an attractive notion for many farmers, carbon markets are complex and it can be difficult to sort through and identify how to successfully participate in a way that is right for the farm business.
The first step before taking any action is for farmers to understand their baseline carbon emissions - whether it be soil carbon or the farm's total emissions - so they can identify any opportunities.
This step is also critical to measuring and reporting on improvements over time.
The newly updated Australian Dairy Carbon Calculator (ADCC) was developed for dairy farmers to confidently help identify the best fitting tool for their business.
Dairy Australia has developed and collated a range of tools to give farmers information they need about how carbon markets operate, as well as things to consider for on-farm projects and options, whether they are opting to manage their own project or to engage with external service providers or co-operatives.
If farmers decide to use an external service provider, Dairy Australia offers helpful tips on doing due diligence to ensure a trustworthy partner is selected.
In a market with much complexity, and at times uncertainty, for farmers, knowing the kinds of questions to ask of service providers and processors and ensuring thorough due diligence in terms of requirements, costs and risks of participating in an ERF Method project can help avoid some of the risks.
"Once you've done your baseline using the ADCC, there is a lot to consider, such as whether you want to sell any credits you generate to earn income, or save them to offset your own on-farm emissions in line with your personal emissions targets or supply chain requirements," said Dairy Australia policy lead natural resources management, Megan Hill.
"Communicate with your processor to ensure you understand their plans for reducing supply chain emissions, as this may impact on your plans for any credits you generate on farm.
"Once you've sold your carbon credits, you won't be able to use them to offset your own emissions."
There is no need to rush into a project.
The opportunities under the ERF and other programs are relatively new and will mature over time, and demand for credits is also expected to increase over time.
So take your time, do research and find an opportunity that works best for you and your business.
For more information, resources and guidance on undertaking due diligence, visit dairyaustralia.com.au/land-water-and-climate/climate/embed
This article was originally published in The Australian Dairyfarmer magazine, May-June 2023 issue.
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