IT IS not every day you ring someone in the beef industry and tell them they are about to incur a new million-dollar administrative cost they know nothing about.
But that has been my experience this week as I have been calling agribusiness owners along the beef supply chain who meet the thresholds of the Government’s new mandatory emissions-reporting laws. Six cattle producers were called, they all met the criteria, or had plans to grow that big in the coming years but had never heard of it.
Emissions reporting is no longer an idea, it is now a law that was waved through last year by Labor, the Greens and ‘Teal’ independents who made little effort to consult with an industry that was going to bear the brunt of its new administrative burden.
While little has been spoken about the laws within the industry, the Red Meat Advisory Council made a submission to Treasury raising concerns about producers who were indirectly impacted by the laws – as the ‘Scope 3’ requirement for processors and supply chains who fit criteria is likely to mean producers are submitting their carbon footprint when they sell their cattle.
But as lotfeeder Barb Madden from Smithfield Cattle Co recently highlighted, the laws will go beyond the indirect impact of Scope 3 reporting and directly impact businesses like Smithfield.
Inquiries this week have found the legislation is likely to extend to businesses a lot smaller than Smithfield, whether or not they are making a profit.
Federal Treasury is claiming that only 1800 businesses across the entire Australian economy (not just agriculture) will be directly covered by the laws – a claim one Beef Central reader said was dubious at best. The Agriculture department doubled down on that claim in the last month, but could not give any estimate of how many farm businesses it covered.
Modelling from the treasury has estimated the inital cost will be $1m to $1.3m, then ongoing costs of $500,000 to $700,000.
The laws are set to be phased in over the next three years and by 2027 they will cover companies who meet two of three criteria: Having a consolidated revenue (turnover) of $50m or more; assets of $25m or more; and 100 employees or more.
Feedlots and traders the most likely to be impacted
Feedlots, large backgrounders and other traders turning over lots of cattle are the most likely to hit the three criteria. The $25m asset value does not account for debt and the $50m turnover does not account for profit.
Some examples of producers who are hovering around the base of the threshold include:
- Bill Speed who has several properties in North and Central Queensland, a 5000 head feedlot and 3000 head on feed in custom feeding arrangements with other feedlots
- John Rogers who has 10 properties across Queensland, between the Winton and Taroom areas and a 5000 head feedlot
- A southern grassfed trader who asked not to be named, who turns over 25,000-30,000 predominantly Angus and some Wagyu cattle.
Rough calculations suggest an 8000 head feedlot, turning over 100-day cattle, would be hitting roughly $50m turnover depending on the market. It is also likely to be worth more than $25m, depending on its land holding.
While it is unknown exactly how many feedlot businesses are this big, as a reference, Beef Central’s Top 25 Lotfeeders list in 2023 covered 43 separate feedyards, the smallest of which was 16,000 head. Beef Central estimates at least 60 Australian feedlots would be larger than 8000 head.
Growth is another factor as there is clearly growing investment into feedlots and more intensive trading businesses – with Australia’s cattle on feed survey breaking records last year with 1.45 million.
Another cattle producer told Beef Central his business did not meet the threshold now, but he had a feedlot under construction and he would likely meet it by 2027.
Service industries also impacted
Beef Central also inquired with other service industries to see if they would hit the reporting thresholds.
Outside Elders and Nutrien, medium sized rural merchandisers come into the fold as they are businesses with high turnover and have a large staff.
A large transport company said it hit the asset value and employee thresholds, however, it was only the big players that fell into the category.
What a double whammy for producers. This sneaky Labor mob are determined to cut the food supply which was happening in US under Biden. Trump stopped it of course. What is strange however is not one mention has been made about this underhanded tax by the LNP. It is doubtful that many of these climate policies will change under LNP. After all Littleproud said they are sticking to the Paris Climate Model and Net Zero. End of story.
A lot of the comments here show the beef industry don’t want to take responsibility. Why is it ok for the beef industry to ignore developing/available solutions and continue using the atmosphere as an open sewer?
This is feeding through from the United Nations Paris Agreement and our Net Zero policies. One avenue of advice on how to combat this when they possibly decide to tax us, is to breed small high value cattle so that when all the compliance is in place, our probable monthly tax bill on the gross weight of our cattle herd will be less than our current animals. That could help us to survive.
WELL WELL WELL. How ansolutely weak and ridiculously anti Australian are the people putting this in place, and how pathetically weak is the beef industry to accept it.
Government departments set up to educate our industry on how to be carbon compliant will deny there is going to be a tax. They will probably say, thats just transparency to protect your export industry. However that does not gel with the previous carbon workshops where we have been meticulously shown the scope 3 probable tax algorithms. Time to let your voices roar people. YES OR NO to this new horrendous impost with the accountancy compliance alone… not to mention the more than likely tax waiting in the barrel for us.
Add the fact that when producers are forced to breed a small frame breeding herd our gross beef exports will be largely reduced. Breeders are grass fed and their weight as retail food will be way less than what we are currently producing for the US mince meat market which is huge for Australias economy. Wonder who that is going to benefit. 🤷🏼♀️
Oh, add to that, the beef we are being encouraged to breed will be too dear for most Australian consumers to buy. You will be looking for alternative protein sources. Won’t be many chickens left the way bird flu is rolling out either. Plant sasuages or some CSIRO bugs perhaps.
Doesn’t it seem old that it’s always the animal in the human food chain getting emissions tax and all the other animals are fine , meanwhile bill gates has his own kind of meat on the market
Great article 👏
So has anyone flown over large cities and done methane testing there??
Why are farmers always considered an easy touch, at blame for anything?
Does no one realise they actually feed us???
Whether you eat meat or not….they feed us!
For goodness sakes stop these witch hunts before all farming in Australia is lost!
This situation needs to be protested as farmers in UK and Europe have done. We can’t just accept this nonsense tax. As it is simply the thin edge of the wedge. It’s design is punitive.
Nothing unusual from a socialist Labor government that is in debt to the lunatic green section. Most farmers are asset rich, lots with considerable debt and this of course will turn into a new tax which will encourage farmers to downsize and of course prices will rise for the consumer. In the meantime government has achieved nothing to protect farmers from processors and supermarkets dictating unfair prices to all farmers.
Just SAY NO.
Do not comply.
… & ask why MLA has been using our money developing “carbon accounting” methodology that we do not want.
Is this just another way of killing another Australian industry. How do you impose another tax on Australian consumers. Administration a nightmare. Easier to tax the BS that comes out of Canberra.
When I read the legislation there was no indication it would cost anything like that for a business to comply. None of the large processors I’ve spoken to have flagged this as a problem either. There are many tech companies with quite cheap products that will solve the admin problem and once there is demand there will be many more. Its really positive for our industry as we can feed supplements that reduce emissions anyway.
This article is not about Scope 3 reporting to processors, Sam. Its about direct reporting to government. We will be clarifying this in a separate report today, as there appears to be some mis-understandings. Full names required for future reader comments please, as per our long-standing comment policy. Failure to do so will see submitted comments overlooked. Editor
This is just another tax and more unpaid jobs for producers
What industry’s are left need to be supported not create more expensive processes..
Got to keep all those extra public servants in a job.
Huh, scary stuff. But why would reporting cost millions of dollars? For an article whose premise is entirely around people being ignorant to new policy, you don’t provide any actual information about it. This feels like an opinion piece, when I’d genuinely like journalism that helped me understand the actual implications.
Hi Adam, modelling from the Federal Treasury department has estimated inital cost will be $1m to $1.3m, then ongoing costs of $500,000 to $700,000. It must have accidentally been left out in the editing process and has been added back into the article. The agriculture department and treasury will not answer my questions on how many agricultural business will be impacted or what information will be required. See previous article below. Editor
https://www.beefcentral.com/carbon/mandatory-emissions-reporting-to-go-deep-into-the-cattle-industry/
Yes, the law was indeed “waved through last year by Labor, the Greens, and the ‘Teal’ independents”.
Action speaks louder and words, and it is not hard to see which side those three groups are on.
However, just as things can be waved in, equally things can be waved out.
Better still, waving out those who waved those laws in would be smart, if they could be replaced by others who would wave those laws out
With an election only weeks away, this presents an opportunity heaven sent, for those who are smart.
The author should not be “ringing someone in the beef industry and telling them they are about to incur a new million-dollar administrative cost.” This is sensationalised, politicised, alarmist journalism and not helpful for industry. Working in the field of providing solutions to the coming reporting needs I can assure you that the price tag, if fully audited would be grossly less than reported. If you read the policy https://treasury.gov.au/sites/default/files/2024-01/c2024-466491-policy-state.pdf it says ‘scope 3 disclosure would represent information that is available at the reporting date without undue cost or effort.’
Hi Steve, the story is about producers having to directly report, rather than having to report to processors as part of scope 3. The 2027 group 3 thresholds cover a lot of Australian family businesses, not just corporates, who we called to see if they knew anything about it. It will cost them a lot of money. Editor
How is this article alarmist?
Beef Central is simply measuring Treasury modelling against real world examples in the agricultural chain. Some commentators have stated that costs of compliance are nowhere the $1 million – 1.3 million (in first year, $500 – 700k/annum after that) as stated in article. BC is only quoting treasury. Treasury has also modelled that only 1800 business nation- wide will be caught in mandatory emission reporting. The basic examples listed demonstrate that far more businesses than 1800 will be directly affected.
The line in the policy statement that ‘scope 3 disclosure would represent information that is available at the reporting date without undue cost or effort’ is highly subjective and doesn’t make clear whether it’s up to the affected business or a public servant in Canberra determining what is undue cost or effort. Some could interpret this statement to mean that Scope 3 reporting for Group 3 companies is optional, but the legislation does not state this and therefore it would be very dangerous to make that assumption.
It may well be that Government does not believe the high costs listed are ‘undue’ – particularly if treasury has miscalculated the size of businesses that will be directly affected.
Treasury is likely modelling compliance costs on the basis of Scope 1 and Scope 3 emission reporting. Scope 1 emission reporting would be ‘relatively’ simple for most businesses of this size, Scope 3 is a whole different ball game and will be incredibly expensive and unwieldy to do – particularly for the Tier 3 businesses who may lack the resources and capacity to collect this information.
Substantial baselining has been done by Group 1 businesses (big retailers, Insurers, banks etc) to ascertain how to ascertain Scope 3 emissions and which has raised major issues and challenges as to how this whole scheme can work in respect to calculator fitness for purpose, data accuracy, ability to verify data inputs, data security and much more. This process has also made clear that agricultural producers of all sizes will very much be caught up in this. How do Groups 1 – 3 businesses measure their Scope 3 emissions without getting supply chain counterparts (producers) to report their Scope 1 data? Group 1 businesses in particular will have and already do have expectations of producers in relation to supply of emissions data. If a producer is unable or unwilling to supply, they may well lose access to markets.
Government needs to clarify the basis of their modeling to answer many of the questions that Treasury has been asked and appear unable or unwilling to answer (at Senate Estimates and subsequently by journalists). Government also needs better communication to affected businesses rather than them learning through a Beef Central article.
The cost of emissions calculations is not anywhere close to those stated. I work in this area and can attest to to that.
Rather than viewing these calcs as an imposition, it is best viewed as pre-emptive positioning to maintain market/supply chain access and exploiting opportunities when they arise.
Regardless of geopolitical climate grandstanding, businesses of the scale required to report are usually well managed with good accounting systems. This means emmission calcs don’t create excess administrative burden.
There are well known correlations between increased profit margins related to emissions reductions and I am yet to see any business that regret the positive influence that recording emissions creates.
The drama arises when businesses have poor record keeping, inaccurate cattle numbers, and negative attitudes.
The evolution of emissions accounting reminds me of the introduction of NLIS tags 20 years ago…the backlash against it was huge, yet here we are recording cattle traceability as normal business practise….recording and managing emissions will be similar.
I work with other industries who are required to report also. Mostly the consensus is to view it as an opportunity and positioning as “first to market”….agriculture would benefit from the same sentiment.
Hi Natalie, as mentioned I am using figures from Treasury and the article is not about producers doing their carbon footprint as part of another company’s scope 3 emissions. This is family cattle companies, who are mentioned above, that will have to directly report to the Government for their entire supply chain. Editor
Natalie Is pretty spot on from my perspective.
If the ‘emergency brakes’ are hit on emissions (apparently methane is an obvious target for this), those on top of this externality (pollution) issue will be better prepared. The emergency brakes scenario is a good chance after a big irregular climate event ie we’ve seen the ‘holes in his hands’ (to believe in climate change – justification for urgent action).
ESG and emissions are not in vogue right now but could potentially come back, fast.
If you can take action with soil and trees without too much cost or risk you could be neutral or structurally net long carbon ($) and out of the woods for your ag business supply chain.
Lots of smart people working on lower emissions in ag too.
You may well be right regarding soils and trees John, but ask either of the responders who are currently working in the field how you would account for soils and trees?
I would doubt many could afford to go into soil carbon projects purely on an insetting basis, as far as trees go, I believe currently the only option for insetting is planting trees. Given that the majority of beef cattle production happens on Agricultural Land Use classification ‘grazing native vegetation’(land that hasn’t been cleared) planting isn’t likely to be viable or necessary, there is evidence that invasive native or introduced species are altering the ecosystem to a point where the biodiversity is in decline. Vegetation encroachment/thickening is a real issue for many!
If indeed emissions calculations aren’t that expensive, the unintended consequences of using a flawed methodology could well lead to costly impacts on the viability of many.
History shows that those that provide the low cost option will be seen as the easiest and most convenient target, Australia’s contribution to the Kyoto protocols should prove that!