Milk production tax used in study to reduce herd

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A tax on milk production and the use of negative subsidies to “organize” herd reduction were among the alternative scenarios modeled by the Climate Advisory Council in its carbon budget report submitted to the government last week.

he carbon budgets presented by the Council are consistent with a 51pc reduction in greenhouse gases in 2030 compared to 2018 and, depending on the reduction in emissions allocated to agriculture, could have a significant impact on income agriculture and the rural economy.

In its technical report, the Council concluded that only relatively small reductions in agricultural GHG emissions can be achieved through currently proven technical mitigation measures and that a reduction in herds would be necessary to meet the main carbon balance scenarios. that he considered.

The Council modeled reductions in head numbers of up to 47%, noting that such reductions would have a dramatic impact on farm incomes and the rural economy.

To achieve the herd reductions modeled in the report, alternative scenarios analyzed by Teagasc have altered the economic incentives that breeders respond to.

Increasingly large negative subsidies have been introduced in order to “design” a reduction in the volume of cattle farming activity needed to lower agricultural emissions to target levels determined by carbon balance scenarios.

Answer questions from Independent Agriculture On these incentives, Teagasc, via the Climate Advisory Council, said market forces (international food supply and demand) are not going to reduce the size of the agricultural sector in Ireland in the years to come.

He said domestic and export demand for dairy products and beef Ireland’s two main sources of agricultural GHGs should stay strong, so farmers should continue to want to produce milk and beef.

“In some of the scenarios, our research tells us that we cannot expect significant GHG reductions to be achieved using only technical mitigation (science-based solutions),” he said in a statement. .

“Therefore, if an important GHG reduction target were chosen for agriculture, policies would be needed to reduce the level of activity, as technical measures alone would not achieve these GHG reduction targets. .

“There are all kinds of policies you can consider, but here just for the sake of exploring scenarios, we’ve looked at a policy that would lower milk prices (a tax on milk production that would make it less profitable) and negative subsidies (another example of taxing production to make it less attractive).

“It’s important to understand that this was just a guess (in order to be able to conduct the modeling experiment) to determine how small the sector needed to become to accommodate GHG constraints. “

Teagasc pointed out that changes in prices and supports were not part of the economic assessment of the cost of downsizing, as other non-tax policies could be used to achieve a similar result (as a quota on the number of animals).

He said that in a real context, actual policies aimed at delivering lower activity levels would require much more detailed consideration and one would expect a range of policy solutions to be explored before a political decision is made. be taken.


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