Key Factor #10: Practical considerations

The Carbon Coalition contends that most of the ‘difficulties’ identified by the Enquiry are minor matters easily resolved by reference to existing practices.

Diffuse sources and sinks

The aggregation of growers is an everyday reality in commodity marketing. Marketing Boards, Grain Desks, and Producer Groups are well understood by growers.

Woolgrowers are setting up “demand chains” or “supply chain solutions for retailers”. Wool buyers or growers themselves aggregate the produce from enough growers to amass sufficient volume to meet the demand of a retail chain for wool of a certain specification so that it can be identified to consumers as a differentiated product.

The diffuse sources and sinks argument ignores common practice. As well as the technology solution lurking in Environmental Management System (EMS). Environmental management systems are “that part of the overall management system which includes organizational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy.”– ISO 14001, Environmental Management System Standard

An EMS would enable the landholder to set their own ‘carbon farming’ goals and report progress. It could be linked to Local Catchment Authority for auditing, enabling decentralised reporting without the fear of Government “Big Brother” oversight.

A modified EMS would enable a “pool manager” to amass saleable quantities of produce and/or carbon. As it can be web-based, “buyers” and “sponsors” can log in and see volumes available.

This issue is a red herring. Its proponents are ill-informed.

Difficult to measure

There is no difficulty in measuring soil carbon. If anything, our scientists are too good at it. They can measure it so well they can tell when it shifts by a molecule.

The issue is not measurement. It is deciding which measurement to choose that we can agree represents the amount that a piece of land holds. Even if estimates at an individual level may be flawed, the error has typical “statistical properties” and aggregating many individual parcels will improve estimates.

Both Drs Kimble and Lal have indicated that the solution lies in this direction.

US scientists are questioning the importance of ‘flux’ and demanding that soil scientists come into the real world and find solutions:

• Dr John Kimble: "It is often pointed out that soils have a large amount of variability, but with knowledge of soil sciences and landscapes, variability can be described and sampling protocols can be developed to deal with this," writes Dr John Kimble. "One reason I feel people say that soils vary and SOC cannot be measured is that we soil scientists focus on showing variability, not on showing what we know about the variability.” Dr Kimble recently retired from the US Department of Agriculture, National Resources Conservation Service, National Soil Survey Centre, Lincoln, Nebraska. "We too often focus on this [variability], worry about laboratory precision and field variation and do not look at the real world where most things are based on averages and estimated data. We tend to focus on finding variation and not on using our knowledge of soil science to describe what we know. All systems vary, but in soils we focus on a level of precision and accuracy that may not have any relevance to the real world because we can take so many samples and look at the variation."

• Dr Rattan Lal: “While techniques of measuring concentration of C in soils, methodologically sampled and carefully prepared for laboratory analysis, are well known, the principal challenge to soil scientists lies in: (i) upscaling the point data to landscape, farm, watershed or a region comprising 100,000-200,000 ha (ii) evaluating changes in soil C with reference to a baseline for cultivated land unit comprising a large farming community, and (iii) verifying that the C thus sequestered is permanent and not re-emitted because of changes in land use or management practices… Soil and tillage researchers must be pro-active in this important theme.”

We have demonstrated that the uncertainty in soil carbon is merely an echo of the uncertainty in every other field of activity surrounding carbon accounting. (See discussion above on uncertainty in all areas associated with climate change. See discussion above about ‘flux’.)

As the industry is capable of living with significant tolerances with fugitive emissions, forestry, etc. it must overcome its discomfort with soils.

The Carbon Coalition contends that the fixation on constructing an ‘accounting system’ has led to a failure of proper strategic focus in this issue.

Cost of MMV

“The Cost of Measurement Monitoring and Verification may be so high as to make it uneconomic.” This objection is yet another red herring.

If Australia’s 130,000 landholders were to bear the cost of soil mapping, baselining, and regular intense surveys and sampling and the price of CO2e remains less than $10tonne/ha/year, then this objection could have some merit.

But the concept of cost per sample must be seen in context of a dynamic equation:

• Bulk buying of soil carbon baselining and monitoring across such numbers would bring the cost per sample down to below $1 (according to Montana State University’s Associate Professor David Brown).

• If the price of CO2e rises to $100/tonne – not unlikely given the shortage of tradable carbon in the world and the absence to date of the three largest emitters, USA, China, and India, whose demand will drive the price of carbon –the cost of measurement becomes trivial.

• The economic gains to be made by the nation in the value inherent in a restored natural resource base should be included in the ROI equation. Researchers in NZ found that, while soil C is valuable for agricultural production, it is between 40 and 70 times more valuable to environmental protection.

• The adoption of soil carbon scoring by the Commonwealth and State Governments as the key performance indicator for a range of ecological improvements to be rewarded by stewardship payments is an efficiency practice: one KPI. Used for this function as well, would further offset the cost of measurement.

100 Year Rule

The Kyoto Protocol was not set in stone. The first trading period was a dress rehearsal for the main event, starting in 2010. It was always to be seen as a proving period to learn how the cap and trade system would work.

The Members of the IPCC agreed that any member can bring suggestions for changes to the Protocols which bring the effort closer to achieving its goals.

As a technique which can be applied with most effect in the next 30 years, the Coalition suggests that the 100 Year Rule be set aside for soils and a 30 year rule be substituted.

The 100 Year Rule is inappropriate for soils because:

• Farmers do not like giving a legal right over their land for 100 years. (The experience of Landcare Carbon Smart is instructive.)

• Farmers are proud of what they have grown and the education they received growing the carbon rich soil will make them disinclined to manage it in a carbon-emitting manner.
• Soil that has saturated with soil carbon is highly productive and drought resistant. It would be highly valued by any new owner.

If “Permanence” is still an issue after a lifetime of farming in a carbon rich environment – which will cause a dramatic cultural shift – the Government can consider stewardship payments for retaining high carbon scores.

If every farm has a soil C score that is used as a single KPI for soil and ecology health, the direction of which score could determine the landholders’ access to government programs.

Initial costs high

Carbon Farming is a low input/low cost method of farming. One prominent member of the Carbon Coalition made a profit from his grazing enterprise every year in the last 4 years while all around him made losses. He did it by reducing his overheads and expanding his carbon farming activities.

The cost of a soil carbon solution should be seen in context of the billions Australian Governments have spent trying to get Australian landholders to “care” and change their paradigm of relationship with the land. A futile endeavour.

A fraction of the vast amounts of money absorbed by public sector infrastructures in pursuit of the unattainable would see soil C baselining completed for every landholder.

Uptake by farmers

Uptake by farmers was the origin of the dominant paradigm for change in any group in a society. In 1943, Iowa State College researchers plotted farmers adoption of a new hybrid corn seed. The bell curve they discovered is now the standard adoption curve for new products and services.

The adoption lifecycle model describes the adoption of an innovation, according to the demographic and psychological characteristics of defined groups. The process of adoption over time forms a normal distribution or "bell” curve.

The demographic and psychological profiles of each adoption group determined their behaviour:

* innovators - had larger farms, were more educated, more prosperous and more risk-oriented

* early adopters - younger, more educated, tended to be community leaders

* early majority - more conservative but open to new ideas, active in community and influence to neighbours

* late majority - older, less educated, fairly conservative and less socially active

* laggards - very conservative, smalls farms and capital, oldest and least educated

The Carbon Coalition contends that the best outcome will be achieved by offering landholders a range of alternatives that offers something for each:

• Trading system 1: indicator/proxy system
• Trading system 2: direct measurement/full value
• Stewardship payments

The introduction of the responsibility to account for total on farm emissions, including methane, would focus the mind of even the most isolated and disconnected landholder (laggard).

The Bell Curve and the levels of risk landholders can tolerate could dictate the speed at which uptake takes place.

When choosing a engagement model, it would be wise to consider the findings of several studies that have identified the reasons why the majority of farmers have not engaged with the Landcare model.

Trade exposed industries

The disadvantage suffered by producers who are required to account for on-farm emissions is real, but not automatic. Nor are producers powerless to address it.

It is a disadvantage based on cost which affects pricing and profitability. Price is the only variable that separates pure commodities (ie. product offerings that are exactly the same).

A pure commodity is a theoretical entity. In the real world there are no commodities (ie. products that have no differentiating attributes). There are only price-buyers, those who claim to consider no other attribute than price. And even these have some degree of discrimination, ie. specifications, suitability for purpose, etc.

All products can be differentiated by some means: quality, delivery times, distribution arrangements, payment terms, style, product specifications, and country and region of origin. Differentiation is also possible on product dimensions such as “organic” “ethical” and “sustainable”.

One method woolgrowers groups are developing to extract themselves from the “open call” auction method of selling wool is known as “demand chains” or “supply chain solutions for retailers”. Wool buyers or growers themselves aggregate the produce from enough growers to amass sufficient volume to meet the demand of a retail chain for wool of a certain specification so that it can be identified to consumers as a differentiated product. The product is expected to attract a premium for this reason alone.

An attractive brand, based on a relevant product difference, can increase that premium price by a significant amount.

Highly elastic consumer markets

A ‘Brand’ can be built on the basis of one or a combination of attributes which are meaningful to buyers.

This process of branding is available to producers required to account for their emissions. What appears as a disadvantage can be turned into a competitive advantage by turning a necessity into a virtue: ie., building a brand that exploits the producer’s emissions reduction.

The “concerned Climate Change consumer” has already emerged in Europe and British retailers are requesting “carbon neutral” wool from Australian wool buyers.

To meet this demand, at least two groups are working to build supply: The Merino Company (TMC), with its zeroCO2 brand, and Carbon Farmers of Australia, with its CarbonCredited™ brand.

zeroCO2

The products bearing the Merino Company’s zeroCO2 swingtag are ‘proudly carbon neutral’ from day 1. “The farmers supplying the wool for ZeroCO2 products remove an equivalent quantity of carbon from the atmosphere to cover the entire production and lifecycle of the products. Third party accreditation is used for both the garment lifecycle analysis, and on farm carbon balancing,” says TMC.

For ZeroCO2 wool products to have a zero carbon footprint for their entire lifecycle, TMC have their growers join the Landcare CarbonSmart Native Vegetation Program, which pays c.$9/tonne CO2e for existing stands of trees that must be maintained for 100 years.

There are no public reports about the success of either program, although these are early days, CarbonSmart launching in March 2007 and zeroCO2e even later.

But contact with growers reveals that the 100 year rule is highly unpopular, and the amounts on offer could be too small to encourage farmers will take risk in areas they do not understand.

The TMC program could have the same problem. Too much could be asked of the grower: they must offset all emissions from all companies in the chain, including processing, manufacturing, and transport. And they must do it with the CarbonSmart product and a 10% premium for their product. Including their Methane emissions. If the price received for wool in the past 5 years is the base for calculation, the proposition is not attractive.

The low appeal of these programs (and we have no statistical evidence of this) has its origins in the program designers’ desire to satisfy the carbon accounting rules, which was greater than their desire to change grower behaviour. (It should be noted that woolgrowers are being asked to offset the entire emissions from their production, processing, manufacturing and distribution when major banks – such as Westpac – who make great milage out of their sponsorship of CarbonSmart or their awards for reporting their emissions, may or may not be planning to go carbon neutral for many year. It’s target is prominent because of its absence. The NAB reported it would be neutral 2 years from now. Westpac managed to make its 2005 annual report neutral.)

CarbonCredited

While zeroCO2 is for wool only, the CarbonCredited program covers all commodities. The fundamental principle governing involvement in this program is participation in a GHG emissions reduction process – with targets and standards and auditing to confirm the performance.

The Australian Greenhouse Office has agreed to use “Uamby” as a case study for agricultural businesses in the Greenhouse Challenge Plus, which forms the basis of the CarbonCredited process.

Emissions reductions strategies include he use of Planned Grazing to ensure a supply of fresh grass (reducing methane emissions), Pasture Cropping to reduce soil disturbance (and methane emissions), Natural Fertilisers to replace nitrogenous fertlisers (reducing nitrous oxide),
Tree Plantings (to offset emissions) and Natural Vegetation Regeneration
(as well). Stock numbers would be slightly reduced once genetics were available for low emission sheep. However stock density is an essential tool in Pasture Management.

To keep track of emissions performance, and to provide an accounting system for carbon trading we are adapting an existing Environmental Management System (EMS) to our own ends

Environmental management systems are “that part of the overall management system which includes organizational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy.”– ISO 14001, Environmental Management System Standard

The average landholder has no motivation to introduce EMS system. A minority of between 10% and 35% are engaged in Landcare and are committed to the environment. Surviving everyday with declining terms of trade and a disintegrating resource base, it takes an unusual incentive to change behaviour which is driven by survival and the need for revenue.
The Missing Link in all Taxpayer Funded programs for agriculture: The Profit Motive. The Ideal System: Farmers rewarded by a market for what they grow, not for meeting government benchmarks or targets.

Our choice of EMS partner is the Australian Landcare Management System (ALMS), which has an environmental/government policy focus. It is an externally audited Australian land management system, based on the internationally accepted ISO 14001 environment management standards. It considers catchment priorities and requirements for biodiversity conservation.

To earn the right to use the ‘CarbonCredited” swingtag on their products, Carbon Farmers agree to be part of a GHC+“Cooperative Agreement” under which they commit to achieving Best Practice reducing emissions on Farm to achieve “carbon neutral” status in stages. The agreement they sign says each individual property“undertakes to put in place appropriate, practical and cost-effective actions to reduce its own greenhouse gas emissions and to encourage its staff and other external stakeholders to implement their own actions.”

A proactive, aggressive, price-making approach to marketing can overcome the disability of competing against growers from markets unencumbered by emissions abatement or making margins with consumers when they see us as “price-takers”

Australia’s farmers can hold their own when it comes to net emissions /net sequestering if they are given access to the soil carbon they sequester and the right to differentiate their product in the marketplace.

FOOTNOTES:

45. Tasmanian Quality Wool Pty Ltd supplies 1000-2000 farm bales of Tasmanian 21 micron wool per year to German retail group Peter Hahn which uses Tasmania’s image, brand, lifestyle and environment to connect with European retail consumers. http://www.leadingsheep.com.au/story.asp?storyid=44
46. See page 19 above.
47. Kimble, J., "Advances In Models To Measure Soil Carbon: Can Soil Carbon Really Be Measured?", in Lal, R., Cerri, C., Bernoux, M., Etchevers, J., and Cerri, E., eds., Carbon Sequestration in Soils in Latin America, Food Products Press, Birmingham, NY, 2006
48. Dr Rattan Lal, “Farming Carbon”, Soil & Tillage Research 96 (2007) Dr Lal is Director, Carbon Management and Sequestration Center, Ohio State University, Columbus, Ohio; Professor of Soil Science, College of Food, Agricultural, and Environmental Sciences, School of Natural Resources, Ohio State University; Liebig Applied Soil Science Award, World Congress of Soil Science 2006; President, American Soil Science Society
49. Sparling, et. Al., 2006, quoted in Kimble et all, Soil Carbon Management, CRC Press, 2007
50. See pages 37, 42, 47.
51. Tasmanian Quality Wool Pty Ltd supplies 1000-2000 farm bales of Tasmanian 21 micron wool per year to German retail group Peter Hahn which uses Tasmania’s image, brand, lifestyle and environment to connect with European retail consumers. http://www.leadingsheep.com.au/story.asp?storyid=44
52. Marks & Spencer are seeking consignments of carbon neutral wool, (Personal communication with wool buyers.) The only thing holding all producers back is MMV.
53. This is a big ask, as the AGO has yet to anoint a woolgrowers’ calculator to calculate the likely methane emissions.
54. The secret to success with eople, according to Dale Carnegie, is to see things from their point of view. Seen from the landholders' point of view, these programs are not sufficiently attractive in their earliest iterations and can be expected to change with time.
55. The habit commentators have of ratcheting up Agriculture’s contribution to Australia’s emissions by adding its “Scope 2” standing energy and transport emissions is a sleight of hand. If these two polluting industries are allowed to offload their emissions onto their customers, where will their liability lie?
56. Last year, the National Australia Bank said it would go carbon neutral within three years, and Westpac says it has reduced its emissions by 40%. The Age, 8, 2007