Farmers, environmentalists weigh in on farm-level pricing plan

Farming and agriculture groups are decrying the government's proposal for farm-level emissions pricing, while environmentalists say it does not go far or fast enough.

The proposal for a pricing mechanism at farm level, accounting for the different impact of methane, was the government's response to plan put forward by He Waka Eke Noa (HWEN): a partnership of farmers, industry groups, and Māori with support from the Primary Industries and Environment ministries.

The government had been expected to put forward its own solution by the end of 2022. With consultation on the range of options launched today, Ministers will be expected to approve final plans next year.

Its preferred solutions differs from the original plan in some key respects. This included - as recommended by the Climate Change Commission - accounting for greenhouse gas absorption by plants through the Emissions Trading Scheme (ETS) rather than via a complex on-farm sequestration accounting system.

He Waka Eke Noa-partnered farmers

Beef+Lamb NZ was one of the 13 partner groups involved in HWEN, and chair Andrew Morrison said that aspect was taking key tools away from the toolkit.

"There was a lot of scientific validation went in with the recommendations," he said. "We're not trying to play a get-out-of-jail-free card, we're not trying to not take responsibility for our emissions, by the same token we want to faithfully be recognised for the behaviours on farm - like mitigations, inhibitors used, sequestrations etc.

"If we take away some of the tools that are the sequestrations that were proposed in this, it just doesn't align with what we need to do to make this work."

The model of sequestration would only account for things like indigenous biodiversity, forestry and riparian margins - but would exclude others including small waterlots, scattered trees, perennial crop lands and shelterbelts, he said.

"If you've got scattered waterlots integrated on your farm and they're 0.3 of a hectare, 0.4 of a hectare, 0.5 of a hectare, they're not recognised. As you add them up they still sequester the same amount of carbon as a block that's 30m wide by 330m long."

"If we're expected to pay a price by 2025, we expect to have recognition of genuine sequestrations also."

He agreed with some of the government's response - including support for farm-level split-gas levies, and the modelling which suggested a lower price could still achieve target methane reductions.

The documents suggested prices for methane be set annually or three-yearly by the government, based on progress against targets and advice from the commission, but noted modelling which suggested the HWEN recommended price of 11 cents per kilogram would be sufficient to meet targets.

Long-lived gases like carbon dioxide and nitrous oxide would be set annually and linked to ETS unit prices, but with discounts that decrease by 1 percent each year.

Morrison said the proposal had significant implications but acknowledged something had to be done.

"Getting to the point where like the rubber is hitting the road - the timeline to get this stuff done - and let's be clear New Zealand is the first country in the world to seek to put a price on agricultural emissions so we need to get this right on implementation.

"We have to demonstrate that we are the best in the world at this and we use science to inform our decision."

Federated Farmers was also a member, and president Andrew Hoggard said the government's proposal was disappointing, and would be a "massive concern".

"I guess it's mainly down to the outcomes they're predicting from this and the modelling and they're predicting ... a 16 to 20 percent hit on sheep and beef incomes and, you know, potentially a 20 percent reduction in terms of sheep meat, a 5 percent reduction across dairy output.

"You add those two up, roughly that's equivalent to about $3 billion ... that would be our wine industry and half of our seafood industry gone overnight, but more importantly what I'm concerned about with that is just the impact that's going to have on rural communities."

He said farmers were more likely to sell up than plant up their farm.

"My gut feel would be that this would be 20 percent of farms going out, not 20 percent of reduction from each farm.

"If you're gonna do forestry, often you've got to have roads, you've got to have all of this, and there is a certain economy of scale to it which is why you're seeing entire farms get bought up and planted.

"Once you plant in pines there's not a lot left to do in land, people enjoy getting out there and moving the stock and all the rest of it."

Sheep and beef farms - which were lower-emitting than dairy farms - were more likely to be among those selling up, particularly the smaller single-family farm, Hoggard said.

"Historically they've got sort of lower profit-per-amount of methane they emit, so the dairy farmers effectively will have a little more oxygen than they will, and sheep and beef farmers will run out of oxygen first."

Greenpeace

Greenpeace Aotearoa's lead climate campaigner Christine Rose said it was true the proposals privileged the worst polluters - intensive dairying - over other farmers like beef and sheep, and it was inequitable for Māori landowners too.

She argued the government needed to go much further.

"The government are using market-based tools when in fact a much more direct and efficient way of managing climate change would be regulation of this worst-polluting sector," Rose said.

She said given agriculture accounted for about half of New Zealand's emissions, what was needed was direct regulation.

"It's a missed opportunity which we can see from the response today finds no favour with anybody and actually sells out the promise that Prime Minister Jacinda Ardern made when she was first running for that position - and that is that climate change is this generation's nuclear free moment.

"This initiative fails to deal appropriately with this most pressing issue of our time."

She also rejected arguments about food security - saying regenerative, organic and plant-based farming was a more productive and efficient use of land for food production - and about the relative impacts of methane.

"That seems to be a bit of an unfortunate myth that surrounds methane when in fact it's more than 80 times more potent as a greenhouse gas than carbon dioxide.

"The government should be supporting future-focused transition to more plant-based regenerative agriculture that works with nature instead of against it."

"That everybody is unhappy with it means that it's not good enough, and by trying to please the farm sector in particular they've actually privileged the worst polluters and that does not honour the responsibilities to future generations."

Academics

University of Auckland environment professor Troy Baisden - who had previously worked on scoping for on-farm emissions calculators - said if priced correctly the system could be an advantage for New Zealand farmers.

"Prices exceeding $100 per tonne CO2-e (carbon dioxide equivalent) mean that farmers can get paid to become more efficient," he said.

He also backed measures to pay farmers for planting.

"Credit for sequestration could be very worthwhile if it reduces the expensive purchase of emissions reductions that New Zealand must buy offshore, or achieve by planting carbon forests that lock up land.

He also said there was a need to be able to calculate the up to 94 percent of nitrous oxide emissions from pastures that did not result from fertilisers, such as through animal urine, which could be reduced through improved efficiency.

The New Zealand Institute of Economic Research think tank's principal economist Dr Bill Kaye-Blake also cautioned against making assumptions about the modelling the government provided, saying predictions about the impacts on agricultural production was not a direct calculation.

"More production per animal, higher value from the volume of production, and shifting to other land uses will all happen. These all add uncertainty to forecasts of future losses for the sector," he said.

He also said there was a trade-off to be made between the fairness a more accurate system could provide, and cost.

"Fairness isn't free: A key question is whether more fairness is worth the additional cost."