Earn more than what it grows: how your paddocks can now earn on more than one front

Opinion | Agribusiness

Carbon, biodiversity and renewable energy are opening up new income streams on rural land. Rohan Dunsdon on why they’re a genuine opportunity, and why the smart move is a phone call to your accountant before you sign anything.

A neighbour drops by and mentions the offer letter sitting on his kitchen bench: a renewable energy developer wants access to that stony ridge that’s never carried much, and the numbers on the term sheet have more zeros than he expected. A few properties over, another family is weighing up a carbon project on their timbered country. Sound familiar? Right across rural Australia, letters like these are landing in more and more mailboxes, and they’re quietly changing the way we think about what a piece of land is actually worth.

For generations, we’ve measured the value of rural land by what it could grow, carry or produce: crops, livestock, water and how efficiently you run the place. That hasn’t changed, and it won’t. But something new is happening alongside it. The same landholding that runs cattle or grows a crop may now also support a carbon project, a biodiversity outcome or renewable energy infrastructure. In my experience, the families who do best with this aren’t the ones replacing farming. They’re the ones layering new income on top of it.

A more resilient, multi-layered enterprise

That’s really the heart of the opportunity: building a business where traditional production stays the backbone, but extra revenue streams improve your liquidity, spread your income and take some of the sting out of seasonal and commodity cycles. The Australian Carbon Credit Unit Scheme lets eligible projects that store or avoid emissions generate tradeable credits, and land-based activities like vegetation management, agriculture and forestry are all recognised as potential project areas. On top of that, biodiversity markets and environmental offset arrangements are creating ways to put a value on the environmental assets you may already have sitting on parts of your property.

For some families, that can mean a meaningful injection of cash at exactly the right moment, money that might pay down debt, fund a succession payment, put in fencing or water, improve pasture or bankroll the next stage of growth. In a strong year, carbon or biodiversity income can give you flexibility around tax and cash reserves. In a tough one, a contracted payment from an offset or renewable project can help steady the ship when prices, yields or the season all turn against you at once.

Where it makes the most sense

The appeal is clearest on country that isn’t pulling its weight through production alone. Marginal grazing land, remnant vegetation, timbered blocks, erosion-prone ground, or paddocks held back by access, slope or soil type: these areas often aren’t generating their highest return the traditional way. In the right circumstances, that same country might support carbon sequestration, biodiversity protection or infrastructure access without materially getting in the way of your core farming operation. It’s a chance to make your least productive acres earn their keep.

But read the fine print: these aren’t risk-free

Here’s where I always slow the conversation down, because these projects aren’t a free lunch. A carbon or biodiversity project can lock in long-term land management obligations that affect your future land use, stocking decisions, clearing rights, finance arrangements and even your options if you ever want to sell. Renewable energy brings its own layers of complexity. A lease or access payment might look attractive, but you need to think hard about the physical footprint (turbines, panels, transmission lines, roads and substations) as well as biosecurity, weeds, noise, visual impact, how it sits with the neighbours, and who has access to your place during construction and operation.

And it’s not just commercial. There are real social and health considerations too. Big renewable projects can split communities, put pressure on family decision-making and create friction between the neighbours who sign up and the ones who don’t. Construction can disrupt normal farm life for months. My strong view is that these things need to be talked through early and openly, around the table, with the whole family, not brushed aside as an afterthought once the agreements are nearly signed.

The tax can be just as tricky as the deal itself

The tax position can be every bit as complicated as the commercial one, and this is the part I’d really encourage you not to guess at. Carbon credits, biodiversity credits, compensation, lease payments, option fees, access fees, infrastructure and management payments can all be taxed differently depending on their legal character, timing and structure. Some amounts are ordinary income; others carry capital gains tax consequences. GST, stamp duty, the small business concessions, primary production averaging, Farm Management Deposits and the way your land is owned can all move the net result in a big way.

A quick example: eligible primary producers may be able to access concessional tax treatment on certain Australian Carbon Credit Units, but the rules are specific and need to be looked at before you sell credits or assign project rights. Biodiversity arrangements can throw up awkward timing issues where a tax bill lands before the cash actually does. And renewable energy agreements often mix revenue and capital receipts, with different outcomes for income tax, GST and future land value. The same gross figure on a term sheet can leave two families with very different amounts in their pocket, purely because of how the deal was documented.

Don’t sign first and ask questions later: call your accountant now

If there’s one thing I’d urge you to do the moment one of these offers lands, it’s this: pick up the phone and talk to your accountant before you agree to anything, not after. Too often the accountant gets brought in once the commercial terms are locked and the legal documents are all but settled, and by then, many of the best planning opportunities have already slipped away. Get your adviser in early and they can work out your true after-tax return, compare different structures, model the cashflow across several years, flag the succession and finance implications, and make sure the whole family understands the long-term consequences of what’s on the table. Remember, good advice isn’t just about paying less tax; it’s about a better commercial outcome, one that fits the productive capacity of your land, your family goals, your asset protection and your plans for the future, and that makes sure you’re properly rewarded for the access, the exclusivity and the long-term restrictions you’re signing up to. The landholders who’ll benefit most from all this won’t be the ones chasing every deal; they’ll be the ones who understand their land, negotiate from an informed position and build something that stacks up for the long haul. So before you sign, make the call. If you’d value a hand thinking it through, our agribusiness team at Bentleys Queensland does exactly this work alongside farming families every day, but whoever you turn to, get them in the room early, while your choices are still wide open.

Rohan Dunsdon · Bentleys Queensland