Processing

Processors’ carbon disadvantage exposed

Jon Condon, 09/10/2012

Recent assessments of the impact of carbon pricing on the red meat processing industry have found that in the absence of any abatement technologies, the industry will experience a fall of 7.2 percent in total gross operating surplus.

That’s worth more than $29 million a year in 2010-2011 dollar values.

In addition, the dozen or so Australian processing facilities that are now required to buy and surrender to the government a permit for every tonne of carbon dioxide emissions they produce are now realising a fall of 8.5pc in total gross operating surplus, or more than $11 million in 2010-2011 dollar values, the assessment showed.

While all processors will be exposed to the pass-through costs from energy suppliers, the real difference in the Australian carbon abatement scheme has been the inclusion of primary food processing, and in particular, the waste water treatment systems used in the sector.

No other country to date has exposed their primary food processing industry to such a cost, the Australian Meat Industry Council said this week.

With more than 65pc of Australia’s beef production destined for overseas markets and the domestic retail sector resisting price increases, it was unlikely that processors would be able to pass these costs forward or back down the supply chain, AMIC said.

Processors in New Zealand are required to report on livestock emissions (head of stock and tonnes of product) but there are no plans for permit surrender obligations across the Tasman in the foreseeable future.

“Meanwhile, the Australian processing industry is required to annually assess and report on energy use and emissions, underpinned by vigorous audit and reporting protocols that all come as additional cost burdens to this high-volume, low-margin business platform,” AMIC said.

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