Grazing and farming land taken over to offset carbon

"Carbon farming with a focus on forestry plantations is just another land-use conflict that's going to take land away from food production" ... the president of the NSW Farmers Federation, Fiona Simson.

FARMERS fear a new rush of environmental plantings for biodiversity and carbon offsets will accelerate the loss of land for food production.

In an emerging trend, carbon traders are starting to buy farms to generate carbon credits for sale under voluntary schemes or - assuming legislation clears the Senate - the federal government's Carbon Farming Initiative.

Storing carbon dioxide through reforestation and other techniques such as soil carbon opens up a potentially vast new market opportunity for rural Australia. The president of the NSW Farmers Federation, Fiona Simson, said while farmers supported the CFI, ''carbon farming with a focus on forestry plantations is just another land-use conflict that's going to take land away from food production''.

The first acquisition linked to the CFI occurred last week. The federal government and R.M. Williams Agricultural Holdings combined to pay $13 million for Henbury Station in the Northern Territory outback, to be transformed into the world's largest carbon farm.

In NSW the value of land bought by carbon traders for carbon offsets in 2010-11 was tiny: the Herald has confirmed one sale last year, of a 1700-hectare sheep and grain farm, Lorraine at Tullamore, in the state's far west, to the stock exchange-listed CO2 Group and utility ACTEW Corporation.

The chief executive of CO2 Group, Andrew Grant, said the property was marginal farming land and had been planted with blue leaf mallee eucalypt, a species endemic to the region. Reforestation was a priority for combating dry land salinity and restoring catchment health.

Mr Grant said his company, which managed 16,000 hectares across three states - almost half the 40,000 hectares under carbon forestry nationally - did not set out to own land and only bought when it had offset contracts to honour.

''We don't prospect, we don't land bank,'' he said.

Robert Gill, who sold Lorraine, said he was nearing retirement age and his son was entrenched in another career. He had his merino sheep and cereal farming operation on the market for a few years before getting an offer near market price from CO2 Group. ''There were not too many buyers about. I felt if I let these people go I might not find another buyer for a while.''

However, Mr Gill said the farm was still productive and he was sad to see it go under trees after spending his ''whole lifetime cleaning it up''. ''I'm very sceptical about the whole thing, to be honest,'' he said.

Where mining projects threaten endangered species, governments can require mining companies to buy land with biodiversity value to offset any impact. These acquisitions, worth almost $33 million, were a significant portion of the Herald's review of land sales in 2010-11.

In February, the Rio Tinto subsidiary Coal & Allied paid $23.4 million for a 9956-hectare stretch of land between Merriwa and Cassilis in the Upper Hunter, including the St Antoine grazing property owned by the cattleman Tony Maurici's Castlebar Holdings. Coal & Allied has confirmed these acquisitions would not be mined but were bought as biodiversity offsets as a condition for expanding mining in the Hunter.

In a presentation to investors last week the company said it had spent $40 million this year on offset acquisitions linked to its proposed Mount Pleasant coalmine near Muswellbrook. The Swiss miner Xstrata has also joined in, paying more than $8.4 million through the property agent Brunskill Pty Ltd for a series of farms in the Muswellbrook area, totalling 4419 hectares.

This payment was omitted from the Herald's Saturday story which reviewed mining purchases across the state; its inclusion pushes mining purchases above $120 million.

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