The report, Effects of the Carbon Pollution Reduction Scheme on the economic value of farm production, was released today by ABARE Executive Director Phillip Glyde.

“Australia’s agriculture sector will be affected by the introduction of the CPRS in 2011 through increases in input costs. There is also a possibility that agricultural processors will pass some of their higher costs on to farmers through paying lower prices for inputs from farmers,” explained Mr Glyde.

The report showed that the economic value of farm production in broadacre industries could decline by between 0.3 per cent and 1.9 per cent in 2011 as a result of the CPRS, depending on the degree of cost-price pass-through from processors to farmers.

The greatest effects in 2011 are expected in the dairy industry, with average farm income estimated to fall by 1.9 per cent (around $1800), assuming 100 per cent cost-price pass-through.

“Although the analysis suggests the effects on Australian broadacre agriculture could be larger by 2015 (ranging from falls of 9.1 per cent to 14.5 per cent), it does not take into account likely actions by farmers to implement lower emissions production and management practices,” Mr Glyde explained.