The cost of sustainability

FARMERS may be expecting the biggest boost to their bank balances in 26 years following strong harvest conditions and surging wool prices, but they’re keeping the bad times of the past firmly in mind

Farmers are joining miners and fishermen in a bid to try to maintain an economically viable business model based on a sustainable approach that is cheaper than conventional methods.

Sustainability advocate and WA businessman George Kailis, whose family has carved a livelihood exploiting WA’s natural resources, says it is paramount for the future of any business to ensure that the resources are not squandered.

Seven years ago Mr Kailis formed a co-operative, the Environmentally Responsible Agriculture Farming Company (ERA), which sells and consults to more than 1,400 farmers in WA, with the aim of reducing chemical dependence and maintaining yields. Today the business enjoys a turnover of $2 million a year in a $1 billion market in WA alone.

The charge into long-term viability is being led by the State Government, which has begun to investigate methods of sustainability.

This week, Premier Geoff Gallop announced an extension to the consultation period on the development of a draft State Sustainability Strategy.

People now have until April 30 to comment on a consultation paper, entitled Focus on the Future: Opportunities for Sustainability in WA, which was released in December.

The Government announced last November that it would develop a strategy to pursue new forms of development that did not compromise the health of the environment or society.

“Sustainability is sometimes referred to as ‘triple bottom line’ – achieving economic, social and environmental goals at the same time,” Dr Gallop said.

Figures released in the Australian Bureau of Agricultural and Resource Economics Australian Commodities March quarter report indicate that fertiliser costs had risen 6 per cent in the past four years and are forecast to jump a further 3 per cent next year. Chemical costs had risen 5 per cent over the same period.

The report shows that, while farmers have got their noses in front this year, a drop in revenue and continuing increases in costs will deteriorate their terms of trade.

ERA is teaching farmers how to adopt organic practices to improve soil quality and increase the retention of moisture, carbon and nitrogen while also removing adverse effects of chemical use, such as erosion, drought, greenhouse gases and groundwater pollution.

And Mr Kailis said that, far from costing more, conditioning the soil organically actually worked out cheaper than using chemicals.

It is this economic reality, and not moral ideals, that is predominantly driving the farmer to become green.

“Every farmer says the same thing: ‘I am not a greenie but if I continue to operate the same way I am not going to be sustainable’,” Mr Kailis said.

“Its no just a greenie idea, it’s actually a good economic idea not to go broke.

“The promise of chemical companies of incremental outputs from incremental inputs ignores total input costs and total gross margin.

“The ERA farmer is interested in total input costs of $100 per hectare, because current total input costs of $150 to $200 a hectare are unsustainable. A fisherman with no fish goes broke. A farmer without a farm goes broke.”

At the same time, providing environmentally friendly products would fill a continuing strong demand from consumers, Mr Kailis said.

ABARE research shows that Australian farmers spent almost $2 billion on fertilisers in 2000-01 and $1.7 billion on chemicals – approximately $400 million more than in 1997-98. Farm business profits, after accounting for family labour, is forecast to average $21,700 in the current financial year, a rate of return on assets of 2.4 per cent.

However, WA farmers are faring worse than other farmers around the country. Average rates of return for the year are expected to be 3.7 per cent.