A proposed amendment to the Farm Management Deposits (FMD) Scheme could see the non-agricultural production income threshold for farmers nationwide extended, allowing those participating to draw more income from wind farms without penalty.

The FMD scheme is a piece of legislation designed to assist farmers in preparing for conditions of financial hardship by providing a tax deductible form of income-banking in times of plenty.

Under the amended system, there will be greater scope for farmers to reserve income from non-agricultural sources, such as rents paid on wind farms, when afflicted by drought or other natural disasters.

The increased income, for many, will be crucial in determining the viability of ongoing commitment to agriculture, according to Deputy Chief Executive of the Clean Energy Council (CEC), Kane Thornton, who noted that

“In many cases we have seen that hosting wind turbines has been the difference between staying on the land and being forced to sell the family farm.”

These decisions, however, must also take into consideration the predicted increase in frequency of natural disasters, like drought and bushfires, exacerbated by inadequate national action on climate change.

Under this scenario, the CSIRO’s 2014 State of the Climate report tells us that

The duration, frequency and intensity of heatwaves have increased across many parts of Australia…[and that] Australian temperatures are projected to continue to increase, with more extremely hot days and fewer extremely cool days.

Fortunately, wind farms have the potential to alleviate some of these strains by providing increased resilience, as well as a reduced contribution to such disasters

“Wind farms perfectly complement traditional agriculture. They don’t use any water, they have a small footprint on the land, and the extra roads built by the wind farm developer can be a real help to farmers for property access and as fire breaks,”

Moreover, the increased incentive for wind energy adoption facilitated by the plan means that

“[Such] favourable tax regulations will not only benefit farmers, they will also benefit electricity consumers as we grow our clean energy resources at the lowest possible cost under the Renewable Energy Target.”

This can occur because the addition of cheaper renewable energy sources to the national grid has the effect of lowering the average spot price in the market, which in turn pushes the dirtier, and often more expensive, forms of power out of the mix.

Whether or not Australian farmers will be able to find investors willing to provide this much needed stimulus, however, will depend on the certainty surrounding the stability of the Renewable Energy Target (RET) now under threat thanks to the Abbott government’s climate sceptic-headed review.

For rural communities to reap the full benefit of this amendment it is vital that the RET remains. A strong and certain Renewable Energy Target will contribute to the reduction of the greenhouse gas emissions responsible for increasing risk in the agricultural sector, but also to the investment uncertainty preventing increased growth in rural economies.

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