What other public policy initiatives can the government employ to address these concerns?
Discuss the pros and cons of these
Prices & Markets
Melbourne, Semester 2, 2016
ECON1020 ASSIGNMENT 2
Value: 35% of total course assessment.
Word limit: 1300 words, across all questions.
Assignment due date: 5 pm, 14th September 2016. Please be aware of RMIT?s penalties
for late submission, as they will apply to you.
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Marking: Marks will be awarded based on how well you: (a) understand the economic
theories and concepts from the lectures; (b) apply these to the question(s); (c) conduct
systematic economic analysis using these theories and concepts (this includes the use of
appropriate diagrams); and (d) draw conclusions, if appropriate. Note that general layman
discussions do not constitute sufficient economic analysis.
Presentation: Assignments should be typed, using 10 ? 12 sized font and 1.5 ? 2 line
spacing. Graphs and diagrams can be hand drawn and scanned in, but must be clearly
drawn and clearly labelled. Read the article Dairy farmers are being ?milked dry?, but let?s remember the real cost
of milk (The Conversation, 25/05/16) attached, about the animal welfare and environmental
concerns associated with dairy farming in Australia.
Then use economic analysis to answer the following questions. In your answers, ensure
that you use relevant economic theories, concepts and/or diagrams covered in this course.
Note that general layman or journalistic discussions do not constitute sufficient economic
analysis. 1 Question 1
The article calls for public policy initiatives to address animal welfare and environmental
concerns associated with dairy farming in Australia. With reference to economic concepts
covered in this course, explain why the government might want to intervene in the dairy
A tax on dairy products is one public policy initiative that the government might consider.
Perform appropriate economic analysis to explain how such a tax could be used to address
the animal welfare and environmental concerns raised in the article. Discuss the pros and
cons of using such a tax as a policy initiative.
What other public policy initiatives can the government employ to address these concerns?
Discuss the pros and cons of these.
What can we as private individuals do to address these concerns in the absence of
government intervention? Are such private solutions likely to be effective?
(5 marks) 2 Dairy farmers are being ?milked dry?, but
let?s remember the real cost of milk
May 25, 2016 6.11am AEST
The dairy industry faces a number of welfare and environmental issues. Cow image from
www.shutterstock.com Gonzalo N Villanueva
PhD Candidate, School of Historical and Philosophical Studies, University of Melbourne The Conversation?s partners
View partners of The Conversation
The Australian dairy farming industry is in a state of crisis. Cheap dairy products and
?uctuations in both the domestic and global markets have taken a ?nancial toll on farmers.
Consumers have rallied to help struggling dairy producers.
But this is only half the problem. The true cost of dairy is also paid by dairy cows and the
environment. Welfare problems
Despite the idyllic image of outdoor farming, several industry practices negatively a?ect dairy
cows. To meet production demands, dairy cows are subject to a continuous cycle of
impregnation, induced calving and milking.
Tail-docking and horn removal are routinely performed without pain relief. Lameness is
another major animal welfare problem, often the result of environmental pressures, such as
tracks, herd size and handling. The average lifespan of a dairy cow is six to seven years,
whereas generally cows can live for 20 to 25 years.
One of the most controversial issues is young ?bobby? calves. A bobby calf is a newborn
calf, less than 30 days old, who has been purposely separated from their mother.
Immediately after separation, cow and calf call out and search for each other.
Most bobby calves are slaughtered within the ?rst week of their life. Handling and transport
pose added problems for young calves who have not developed herding behaviours, are
vulnerable to stress, and are forced to go without their mother?s milk. Each year, 450,000
bobby calves are slaughtered. Advocacy groups frequently uncover the routine abuse of bobby calves in Australian
abattoirs and challenge the dairy industry to do something about it.
Yet aside from the wider ethical questions over the use and exploitation of animals, farmers
are not legally doing anything wrong. This is because the treatment of animals operates in a
legal context where animals are considered absolute property.
What?s more, farm animals are exempt from the provisions of anti-cruelty legislation. Codes
of practice are practically useless, because they promote low welfare standards and are
unenforceable. The environmental impact
As well as systematic welfare problems, livestock farming is, both directly and indirectly, one
of the most ecologically harmful human activities. The Australian livestock sector is worth
A$17 billion and dairy cattle farming is a A$4.2 billion industry.
In Australia, livestock farming accounts for 10% to 16% of greenhouse gas emissions, with
dairy farms contributing 19% of this, or 3% of total emissions. Methane emissions, from
digestion and manure, and nitrous oxide from livestock are signi?cant contributors. Globally,
the livestock sector is responsible for more greenhouse gases than the world?s transport.
Livestock production accounts for 70% of all agricultural land, including the land used to
grow crops to feed these animals. Animal agriculture is a key factor in land degradation,
deforestation, water stress, pollution, and loss of biodiversity.
Livestock farming will also be a?ected by climate change, particularly changes in
temperature and water. The quantity and quality of pasture and forage crops will also be
a?ected. Diseases may increase due to ?uctuating weather and climate. Emissions can be reduced
Just as the energy sector is attempting to transition to low-carbon energy sources to tackle
climate change, the agricultural sector needs to transition to an ethical and sustainable
From the current crisis, there are several opportunities for farmers to seize. Large transitions
are possible in land use, production, output and pro?tability.
Places such as Gippsland in Victoria, which currently produces 19% of Australia?s dairy, have
the opportunity for agricultural development based on apples and brassicas, such as
broccoli, kale, cauli?ower, cabbage, turnip and mustard. Some of these crops are already
popular in the region. As a result of climate change and increasing temperatures, some areas
will be more suitable than others.
While still in the stages of research, perennial grain crops ? which store more carbon,
maintain better soil and water quality, and manage nutrients better than annuals ? have the
potential to contribute to sustainable agriculture. New land uses could also include carbon
plantings, biofuels and bioenergy crops. Investing into further research for alternatives to
livestock farming is needed.
Some have argued that livestock emissions can be technically mitigated by modifying animal
feed, better managing pastures, carbon sequestration and manure storage. Welfare issues remain
But technical mitigation does not address the endemic animal welfare problems in the
livestock industry. Consumer demand is one of the most powerful strategies to combat animal welfare and
environmental problems. Research shows that we must reduce food waste and losses in the
supply chain and change our diets toward less resource-intensive diets, such as a plantbased diets. Doing so would cut emissions by two-thirds and save lives. It?s possible to
eliminate animal su?ering and reduce carbon emissions by reducing and replacing livestock
production and consumption.
Alternatives to dairy milk include soy and almond milk. Soy milk is nutritionally comparable to
dairy milk and has a signi?cantly smaller environmental footprint.
Policy initiatives also need to address these issues. The Food and Agriculture Organization?s
Livestock?s Long Shadow report recommends a policy approach that correctly prices natural
resources to re?ect the full environmental costs and to end damaging subsidies. In the
interim, higher taxes on meat and other livestock products will be necessary to improve
public health and combat climate change.
Denmark, for instance, is considering proposals raise the tax on meat, after its ethics council
concluded that ?climate change is an ethical problem?.
Governments everywhere need to have a transitional plan for livestock producers and
workers ? one that helps to cultivate the ethical and sustainable agricultural endeavours of
the future. Climate change
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