Beef producers urged to be cautious with carbon contracts

Beef producers urged to be cautious with carbon contracts

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CONSIDERED: Beef producers have been urged to weigh up the risks and opportunities, with professional help, before signing up to to carbon contracts.

CONSIDERED: Beef producers have been urged to weigh up the risks and opportunities, with professional help, before signing up to to carbon contracts.

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Demand for carbon offets ramping up but it's far from a 'where do I sign' situation for producers

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CARBON aggregators are ramping up their contact with beef producers as demand for offsets becomes hotter and hotter with big corporations, wielding big budgets, look to become carbon neutral.

The opportunities for the producer are substantial, but industry leaders and agribusiness lawyers are urging caution.

The fear is the big dollar figures touted might create a culture of 'where do I sign' without long-term risks being properly assessed, including those to country economies.

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Northern Territory Cattlemen's Association chief executive officer Will Evans said the unfortunate reality of today's carbon market was that it was largely unregulated, especially in regard to the conduct of carbon aggregators and consultancy companies.

For many of them, the current market was seen as a gold rush and unethical behaviour was unfortunately not uncommon, he said.

The trade-off for carbon credit income can include locking up significant areas of land, changing management practices, running less cattle and investing in infrastructure - all costly to the producer.

Some carbon contracts offer significant downside risk to producers and should be read very carefully, Mr Evans said.

"If you are approached by a carbon company, it is important to seek independent advice and if you're offered a contract, it's vitally important you get independent legal advice," he said.

Red Meat Advisory Council chair John McKillop said locking up land with badly-formulated carbon scheme contracts risked not only damaging productivity but also the environment and regional communities.

"Entering a 25-year land agreement with a start-up scheme operator carries a lot of risk and should not be signed without extensive due diligence on the contract terms," he said.

"As an industry, we need to consider the longer-term implications of carbon projects and understand the risks. In short, we must remember there are no free lunches.

"There is significant potential for carbon sequestration for our industry but it has to be done on our terms with projects that support industry growth and increased productivity."

Agribusiness lawyer Trent Thorne, McCullough Robertson in Brisbane, said the issue was becoming more and more important to the beef industry and a key topic at every major forum.

The carbon market offered substantial money-making opportunities, often in situations where producers were simply adopting good agricultural practices, and that was very exciting, he said.

However, there were very real concerns about productive country being tied up for some types of sequestration projects and any offer needed to be closely scrutinized with a risk assessment lens, he said.

"It depends very much on where your property is located as to the opportunity, and risk," Mr Thorne said.

"In the more fertile, productive zones, for example, the opportunity for carbon sequestration are more prevalent.

"In some parts, there is not a lot of risk in locking up land for a long period but in others, the trade-off is high and contracts may be worded such that you can't produce on land anymore at all."

The flow-on of that goes well past the farmgate too, and that was something individual producers had to consider.

"Those effects are very real to country economies that depend on every dollar," Mr Thorne said.

"In some way, these contracts will impact production of your land for an extended period of time, generally 25 years for a sequestration project. It's a complicated area, and you are dealing with your largest asset, so proceed with caution."

Mr Evans agreed 25 years was a long time to get the terms of a contract wrong and said gaps in contacts could be difficult to identify, especially as much of this market is new.

"While there are many great carbon companies out there, determining who is who is difficult," he said.

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The story Beef producers urged to be cautious with carbon contracts first appeared on Farm Online.

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