Guy Trafford points out that taxing farming carbon output will just reduce or close local production, with urban food then sourced overseas. First-mover actions will be an own-goal

By Guy Trafford

The terms of reference for the Productivity Commission was investigate “Opportunities and challenges of a transition to a lower net emissions economy for New Zealand”. New Zealand has been slow out of the blocks on this issue and while most developed countries have made considerable progress towards reducing their emissions we have moved backwards especially around the area of transport.

However, the now very obvious elephant in the room is agriculture, and especially livestock.

The issue of including livestock into any ET scheme is going to be a very vexed issue. Yes, agriculture contributes around 49% of New Zealand’s emissions and so if a credible effort is made to reduce total greenhouse gas emissions agriculture and particularly livestock needs to be included.

However, how should be this done in a fair way, and in a way that gets the benefits without breaking the bank of either farmers or the regulating body, is not going to be easy.

The Productivity Commission believes that a carbon price of somewhere between $157 - $250 will be required to achieve the GHG savings needed to meet future targets. This, in my view, is rubbish and scare mongering. 

But before price gets tackled there is the whole issue of how agriculture is to be included. If the idea is to cease farming in New Zealand as we know it then applying a high price as a blunt instrument may have some merit. However, apart from some fringe groups I do not believe this is what the bulk on New Zealanders wish to see.

There is general agreement that to reduce emissions farmers will need to be measured on an individual farm basis, thereby the incentives are directly felt and able to be responded to.

To assess farms will take an army of bureaucrats who don’t currently exist. Farm costs will rise, and the cost of food should go up - just as the price of fuel will and has gone up. Except in this case it won’t.

Farmers will not be able to pass the additional costs of production on to the consumer, where it should lie, as supermarkets will just purchase cheaper food from overseas and sell it here. Already, New Zealand imports cheap pork, cheeses, fish, vegetables, etc etc., from overseas where standards for environmental compliance are lower and effectively undercut local producers

As long as New Zealand is the only country who directly targets agricultural emissions, farmers here are playing on a very uneven playing field. Being a first mover achieves lofty ideals but it comes at a very high cost.

International food production follows the lowest cost of production and the highest profits. If you have doubts check the labels next time you buy your food.

Planting trees on properties which are eroding and not suited to more productive forms of primary production is a sensible and obvious approach and due to the low productivity already on this land a price well below those mentioned in the report will achieve this end. Bear in mind that farmers brought their farms to farm and not to be foresters and so the land use change will not happen overnight.

One of the greatest impediments in encouraging this land use change is getting consistent policy from successive governments as we have had wild extremes in the past as governments actions are driven by short term political expediency rather than having bi-lateral agreements that stand the test of time. Given that we can work on 50 year rotations for pine and longer for other tree species the correct mix of species should allow a long term approach in tree planting to delay the cyclical concerns that plantation harvesting and a saw tooth graph approach to GHG emissions.

Within reason most sheep and beef farmers should be able to make money out of the scheme by selective plantings especially if other technologies are available in the future to reduce livestock emissions and providing the carbon price for trees remains at an adequate level, and I would suggest $25 per tonne not $250 would be adequate for this.

As usual dairy farming is going to be the problem child, simply because most dairy farms are on highly fertile and generally flat land unsuited for increased levels of tree planting. Given that we can’t rely upon milk prices to be at a level to sustain a higher carbon price, if farmers believe this ‘future’ is inevitable  then I can think of worse things to doing than forming consortiums and purchasing poorer classes of land able to be planted, land to hedge against their future liabilities.

So to the future?

Consistent bilateral agreements are very necessary.

Provide reasonable time frames to allow farmers to respond (unlike 1984). This may also gain time to encourage other countries to come on board and level out the playing field.

Provide two forms of auditing to simplify the on-farm assessment of emissions. One with a higher price that uses a paper trail evidence approach (stock numbers and sale dates and weights etc) and another with a lower price but a higher administrative cost that does an individual (complicated) on farm assessment so farmers who believe they are able to achieve savings over and above an average table top approach are incentivised.

Let’s see how this goes and get our transport emissions down in the meantime with other means as well as an ETS (car testing for emissions and higher registration costs etc. to encourage less cars on the road).

And look to a future that we may recognise.