Carbon tax may cost farmers dearly

In a world increasingly focused on climate change, farmers have little choice but to reduce their carbon footprint. If they fail to do so, they stand to lose both market access and money. David Farrell, founder of agricultural consultants Blue North, spoke to Lindi Botha about the urgent need for farmers, particularly exporters, to carry out their calculations and take action.

- Lindi Botha

What is South Africa doing to reduce its carbon footprint?

Countries that have signed the Paris Agreement of 2016 are legally bound to reduce greenhouse gas emissions. As a signatory, South Africa has drawn up nationally determined contributions to achieving these targets by significantly reducing its emissions from the current level of 600 million tons of carbon dioxide to 200 million tons by 2050. This is a big ask for our industries.

As a result, South Africa’s government has instituted a carbon tax to try to shift the country to a low-carbon economy. The tax is based on the ‘polluter pays’ principle, and the idea is not to generate more tax, but to change behaviour.

As far as globally required tax rates go, South Africa is very far behind. The rate will have to go up nearly 2 000% to get to the required range.

How does this affect agriculture?

Agriculture is exempt from paying carbon tax until 2022, but the sector is still paying a carbon tax through fuel consumption as there is a carbon tax fuel levy in place. Eskom is also exempt until 2022, but after that they will pass the extra cost on to the consumer, which means that farmers will pay more for their electricity.

The first step that farmers should take is to start reducing their dependency on fossil fuel energy. They should then focus on all the chemicals they use and the process of converting indigenous bush to cultivated lands. The annual carbon emissions from a typical South African fruit farm are 7t/ha/year; this includes fuel, electricity, fertiliser, agrochemicals and land-use change. Once carbon taxes for agriculture come into force in 2022, farmers can expect to pay about R1 200/t, which equates to R252 000 for a 30ha farm.