Bioeconomic modelling of woody regrowth carbon offset options in productive grazing systems

Agricultural land has been identified as a potential source of greenhouse gas emissions offsets through biosequestration in vegetation and soil. In the extensive grazing land of Australia, landholders may participate in the Australian Government’s Emissions Reduction Fund and create offsets by reducing woody vegetation clearing and allowing native woody plant regrowth to grow. This study used bioeconomic modelling to evaluate the trade-offs between an existing central Queensland grazing operation, which has been using repeated tree clearing to maintain pasture growth, and an alternative carbon and grazing enterprise in which tree clearing is reduced and the additional carbon sequestered in trees is sold. The results showed that ceasing clearing in favour of producing offsets produces a higher net present value over 20 years than the existing cattle enterprise at carbon prices, which are close to current (2015) market levels (~$13 t–1 CO2-e). However, by modifying key variables, relative profitability did change. Sensitivity analysis evaluated key variables, which determine the relative profitability of carbon and cattle. In order of importance these were: the carbon price, the gross margin of cattle production, the severity of the tree–grass relationship, the area of regrowth retained, the age of regrowth at the start of the project, and to a lesser extent the cost of carbon project administration, compliance and monitoring. Based on the analysis, retaining regrowth to generate carbon income may be worthwhile for cattle producers in Australia, but careful consideration needs to be given to the opportunity cost of reduced cattle income.

Use of business analysis in beef businesses to direct management practice change for climate adaptation outcomes

Beef businesses in northern Australia are facing increased pressure to be productive and profitable with challenges such as climate variability and poor financial performance over the past decade. Declining terms of trade, limited recent gains in on-farm productivity, low profit margins under current management systems and current climatic conditions will leave little capacity for businesses to absorb climate change-induced losses. In order to generate a whole-of-business focus towards management change, the Climate Clever Beef project in the Maranoa-Balonne region of Queensland trialled the use of business analysis with beef producers to improve financial literacy, provide a greater understanding of current business performance and initiate changes to current management practices. Demonstration properties were engaged and a systematic approach was used to assess current business performance, evaluate impacts of management changes on the business and to trial practices and promote successful outcomes to the wider industry. Focus was concentrated on improving financial literacy skills, understanding the business’ key performance indicators and modifying practices to improve both business productivity and profitability. To best achieve the desired outcomes, several extension models were employed: the ‘group facilitation/empowerment model’, the ‘individual consultant/mentor model’ and the ‘technology development model’. Providing producers with a whole-of-business approach and using business analysis in conjunction with on-farm trials and various extension methods proved to be a successful way to encourage producers in the region to adopt new practices into their business, in the areas of greatest impact. The areas targeted for development within businesses generally led to improvements in animal performance and grazing land management further improving the prospects for climate resilience.