Implications of greenhouse emission reduction policies for the Australian sheep industry

Abstract

The potential impact of Australia's proposed carbon pollution reduction scheme (CPRS) on the Australian sheep industry was modelled. The model assumes that there will be a considerable delay before overseas nations adopt similar emissions policies. Even if agriculture were exempt from the CPRS and did not incur any liability for emissions, the indirect effects of the CPRS on farm input costs would be significant by 2016. Even if 90% of required emission permits were allocated to sheep farmers at no cost, farm cash margins would decrease by 6–30% by 2016 and by 12–31% by 2030. With the exception of improved feeding management, current technologies for controlling methane emissions from ruminants are not cost effective and may result in under-utilisation of low-cost fibrous feed resources. Farm systems models such as GrassGro3 and SGS Pasture have a limited ability to automatically model the effects of changes in flock nutritional management on methane production. Australian sheep breeders are unlikely to have a financial incentive to include methane production and feed intake as selection criteria in Merino breeding programs. This is not surprising considering that the annual worth of a fleece is about $36 per ewe, whereas the annual methane production of a ewe would only be valued at –$3.50 if carbon were valued at $28/t of carbon dioxide equivalent. Research is needed to quantify genetic associations between methane emission and production traits and to develop strategies for reducing sheep methane emission without affecting productivity and profitability.