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Will perverse policy send sugarcane up in smoke?

Teresa Fox - Thursday, August 27, 2020

“Let the cane fields burn, let the flames rise. Let the politicians and the bankers in the city look up in wonder at the glow in the sky…” - Graeme Connors

Although the iconic burning of cane fields is a rarity in most regions today, we may be facing a future where we see the sector up in smoke from perverse policy outcomes.

In 2019, the Queensland Government introduced further regulation on farmers in reef catchment areas to protect the Great Barrier Reef (GBR). Regulated amounts of nitrogen and phosphorus application for sugarcane farmers prescribed by the government were already below the industry best management practice (BMP) recommendations, referred to as the ‘six easy steps’ program, and additional regulation places untenable pressure on farmers. Reduced levels of nutrients may have positive effects on environmental health, but these regulations will also likely have adverse impacts on sugarcane yields, subsequently leading to decreases in productivity and profits of farmers.

Action is clearly needed to protect the heritage-listed ecosystem, but is this regulation the best possible tool we can use? Can we create more nuanced policy which better balances the needs of the environment and farmers and better acknowledges and attributes value to the sector?

Industry group Canegrowers has investigated the effect on productivity likely to result from the regulations limiting nitrogen application to levels below industry standard. Their report, which assessed the flow-on effects for downstream value chain actors and regional communities which depend on the sector, estimates the economic impact from decreases in production at many millions of dollars, escalating to billions in loss when estimated over a 10-year time period (1). While this blog won’t delve into detail regarding the accounting methodology, the report does open the door to a purposeful discussion on the importance of agricultural policy balancing triple-bottom line impacts.

The notion of triple-bottom line moves away from the traditional focus on maximising the ‘bottom line’, i.e. financial profit, and instead encourages a holistic approach of balancing impacts and/or benefits between the environment, economy and society. Reporting and measurement of these metrics are increasing globally across all industries. For the greater good of the country and to maximise taxpayer dollars, government should also be focused on evenly distributing the impacts (and/or benefits) on people, places and profits from policy. This has been an ongoing discussion regarding management of the Murray-Darling Basin (MDB).

Creating policy for wicked problems (such as the protection of the GBR or management of the MDB) is complex and difficult. There will always be losers, with some members of society likely to feel the impacts more than others. To help untangle competing priorities we must ask ourselves, what do we value in these complex situations?

Obviously, the health of the GBR National Park and surrounding environment is of crucial value to the community, including cane farmers. The link between healthy ecosystems and agricultural production is well established and accepted amongst the agricultural industry. Farmers rely on abundant natural capital (soil, water etc.) to farm in a profitable and sustainable manner. Sugarcane farmers have demonstrated their willingness to engage in positive environmental stewardship through the implementation and wide-scale uptake of the voluntary SmartCane BMP program.

But what about the future sustainability of these communities who rely on the sugar sector for prosperity? The sugar sector supports a diverse and thriving society across the Queensland coastline. It holds the social fabrics of these communities together, employing many people directly in various roles along the supply chain and indirectly in support and advisory services.

When the draft Reef Protection Bill was opened for community consultation in early 2019, industry struggled to bring important meetings to locations in regional reef catchment areas. Only one meeting was originally set, which was to be held in Brisbane, thousands of kilometres away from some sugarcane communities. After much lobbying by industry, several meetings were also held in regional locations to give those most likely to be directly impacted by the proposed legislation a chance to voice their concerns. However, the fact that lobbying was needed in the first place speaks to the current level of consideration given to the future prosperity of sugarcane-reliant communities in this process.

As the goalposts of regulation continue to change, with a strong likelihood of red tape increasing in the future, some farmers will struggle to profitably farm sugarcane. This will lead to some farmers exiting the industry and others diversifying production. This restructure is already occurring with 5,000 hectares of sugarcane farmland recently purchased and converted into other crop production, including macadamias in Maryborough. This land area is used to supply approximately one-third of the sugarcane for the region’s mill, and the conversion throws the future viability of the sector in the region into question.

It might be the case that new and emerging sectors may be able to equally support these communities as sugarcane currently does. Perhaps in the future, rather than passing sugarcane fields when driving along the Queensland coastline, our view may be replaced with different agricultural crops or completely different industries. Maybe it’s just time that some regions transition away from sugarcane production to other industries. Whether you agree or not, this is an open conversation we should be having when making policy decisions.

It should be acknowledged that other factors are also impacting the profitability of the sugarcane sector, such as global sugar prices, input costs and weather events. These issues are prompting more farmers to diversify into other commodities as a risk management tool. However, perverse policy outcomes are creating yet another hurdle for farmers already under a great deal of stress. It is extremely difficult to mentally fight through downturns in commodity prices when the future of farming involves increasing amounts of red tape, regulations, audits and diminishing returns. The Canegrowers report investigated the economic impact of these regulations but did not include non-economic costs. Mental health, deterioration in the social fabric of communities and disincentives for the next farming generation are all very real impacts which could result from poorly thought-out policy.

Current policy does not appear to value the sugarcane communities along the coast of Queensland and their future prosperity and should be reviewed. Purposeful discussions should be had as to how to continue protection of the GBR without disregarding the economic and social impacts which come along with increased regulation.

Regulation is not the only policy instrument available to address wicked environmental protection problems. One alternative model could be a payment for ecosystem services approach, such as that used in the UK, which incentivises environmental stewardship and rewards farmers for best practice by providing a pathway for community desire for change to be market driven rather than enforced through regulation.

Although there is no silver bullet solution which will solve this problem, we must attempt to better balance competing priorities – the environment, economy and society – in agricultural policy decisions. We must assign greater priority to evidence-based research which balances triple-bottom line impacts more evenly when developing agricultural policy. Without it, I fear the future of the sugarcane communities along the coast of Queensland will be burnt out in more ways than one. 


(1) $160 million annually and $1.3 billion over 10 years.

 
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