Effect of a carbon price on farm profitability on rain-fed dairy farms in south-west Victoria: a first look
In this study, the possible impact of different prices of carbon on farm profitability in two dairy farm businesses with different feeding systems was analysed. The feeding systems evaluated were a ryegrass pasture-based system (RM) and a complementary forage-based system (CF). The carbon charge was imposed on the systems as they currently operate and without the farmers making strategic changes in response to the tax. The study is a first-look approach in order to gauge the order of magnitude of a carbon charge on dairy systems if they were to continue to operate essentially under the same system following the impost of a cost of carbon emissions, and to gauge the likely size of incentives to respond. The main finding of this study was that net present value (NPV) of operating profit for each system over the five years was reduced by a price on carbon. The carbon charge of $15/t CO2-eq reduced the present value of the operating profits over the five years of operation by around 7% and 6% in the RM and the CF systems respectively. The carbon charge of $25/t CO2-eq reduced the present value of the operating profits over the five years of operation by around 11% in the RM and 10% in the CF systems. Farmers continually face rising costs of production, and respond accordingly. A price on carbon emissions, if ever applied to agriculture, would invoke responses to further increase productivity and possibly to seek offsets if genuine opportunities occurred.
When requesting a correction, please mention this item's handle: RePEc:ags:afbmau:131748. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.