9 June 2021

What’s wrong with a carbon tax on Australian beef? Just about everything…

By Dr Catherine McBride

George Eustice is threatening to slap a carbon tax on foreign meat. Apparently this new weapon in his protectionist arsenal is aimed at Australia. It would appear that Eustice, together with the National Farmers Union (NFU), will stop at nothing to keep the UK dependant on meat imported from the EU.

The only trouble with this plan is that Australian beef producers are not the big polluters that Eustice seems to believe them to be. Australia’s graziers are taking their carbon emissions seriously. So seriously that several of them are now net carbon sequesters and are selling their carbon credits on the international carbon markets.

Eustice’s about-face on environmental issues was unexpected and reeks of convenient protectionism. It was only in early May that a leaked memo revealed that Eustice’s department, the Department for the Environment, Food and Rural Affairs (DEFRA) had not developed a plan to reduce its own greenhouse emissions to meet the targets set by the Government’s Climate Change Act even though his department is responsible for both the Environment and Farming, estimated to be responsible for a tenth of total UK emissions.

If DEFRA is having trouble finding ways to reduce its emissions perhaps, they should follow Australia’s example rather than proposing to tax imported Australian meat. Australian farmers are minimising their carbon footprint by removing atmospheric carbon dioxide into natural carbon sinks like soils, plants and trees. Australian agriculture’s greenhouse emission are already 63% below their 1990 levels. The use of cover crops, tree planting, rotational grazing and no-till farming are helping to minimize soil moisture loss and soil erosion while also increasing soil carbon. Also new seaweed-based cattle feeds are reducing methane emissions from cattle.

Some Australian farmers have sold their carbon sequestration as carbon credits to international companies. But it requires rigorous monitoring of organic carbon levels in soils. The Australian government has announced a national soil strategy and estimates that Australia could remove 90m tonnes of CO2 from the atmosphere each year with the additional benefit of improving its farm productivity and drought resilience.

A report by the University of California Davis found that: grasslands and rangelands are more resilient carbon sinks than forests; grasslands don’t release carbon during bushfires; and grasslands help to lock carbon into the soil. It is not grazing but the conversion of grasslands into cropland that is releasing carbon into the atmosphere – carbon that may have been trapped in the soil for hundreds of years. Conserving grasslands will promote reliable rates of carbon sequestration to help meet emission reduction targets: every acre of grassland could reduce 0.8 tonnes of greenhouse gases each year. Australia has 341 million hectares of grazing land, 87% of its total farmland, while the UK has only 10.2 million hectares of grassland. So, Eustice may find it hard to put a carbon tax on Australian grass-fed beef.

Australian farmers are also growing biofuel crops such as canola, wheat starch, grain sorghum and sugarcane. Most Australia petrol stations have been selling E10 petrol – made with 10% ethanol – since the early 2000’s. Meanwhile the UK will only be introducing it this summer, even though transport is responsible for 27% of the UK’s greenhouse gas emissions.

Leaving aside his misguided approach to a carbon tax, Eustice’s protectionist proposal is absurd for at least two additional reasons: First, the UK is not self-sufficient in meat production. The UK imports roughly 20% of the beef it consumes, as well as 40% of the pork and 10% of the chicken. The UK only exports lamb but is so uncompetitive in this market that, according to Trademap, it only managed to sell 4 tons to the US in 2020, while Australia sold 84,829 tons and New Zealand sold 24,950 tons.

The second absurdity with Eustice’s plan is that UK grazing farms are for the most part loss making. In 2019/20, almost 80% of UK lowland grazing farms and over 60% of ‘less favoured area’ grazing farms made a loss on their income from agriculture. These loss-making grazing farms only continue to exist because they are propped up by government subsidies. Even those farms that have diversified their income away from agriculture have on average not made enough to cover their agricultural losses. This is not unusual; they have made a loss on agriculture every year for the last seven years. In any other industry they would have gone out of business.

This proposed tax will be a carbon copy of the tariffs and quotas placed on Australian beef by the European Union, a protectionist customs union. It is the antithesis of the promise of Global Britain.

UK agriculture does not need more protection, it needs consolidation by actual farmers – not lifestyle farmers. Grazing benefits from economies of scale and few UK grazing farms are large enough to be commercial. According to the AHDB Yearbook 2019, the average beef herd in England was only 27 animals. This is not large enough to be financially viable, but DEFRA considers farms with more than 10 cows or 20 sheep as a commercial holding.

There is no point in more protection for what must surely be one of the worst performing industry sub-segments in the UK. Delaying the removal of tariffs and quotas for 15 years, as demanded by the NFU, or adding carbon taxes to Australia’s efficient and unsubsidised farm products, who may be sequestering more CO2 on their grassy plains than they produce, would benefit neither the economy nor the environment. If the Government – for political reasons – wishes to support loss-making farms through subsidies, that is now in their gift as we have left the EU.  But they should not penalise the rest of the country by inhibiting imports of less expensive, high-quality food.

Instead, the Government should be signing tariff free trade deals with more efficient producers, like Australia, because these trade deals will benefit the whole economy.

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Catherine McBride is a Fellow at the Centre for Brexit Policy.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.