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Article: More hard work ahead

November 3, 2022

By Kelly Forster, He Waka Eke Noa Programme Director 

The concerns across the sector about the impact of the Government’s proposals for agricultural emissions pricing are heard and shared by the He Waka Eke Noa Partnership.

We’re already having conversations with the Government about how to improve the proposals recently released by the Prime Minister.

We’ve said to the Government all along that any price on emissions should be as low as possible to achieve emissions reductions while maintaining the viability of the sector and its ability to produce lower emissions food for the future. This remains Waka Eke Noa’s number one priority.

The Government’s proposals were a double-edged sword – progress from where we started three years ago, but some concerning changes from the approach that He Waka Eke Noa recommended in June. 

We started this journey when the Government passed a law requiring emissions reductions and legislating for agricultural emissions pricing by 2025.  While nobody wants to see a new levy on farmers, it’s a fact that emissions pricing is coming and we have to work to make it as manageable as possible.

Those still arguing against efforts to reduce emissions are ignoring reality. Consumer expectations, locally and internationally, have shifted. Many competitors for New Zealand’s food and fibre products are setting net zero targets and working to lower emissions from food production.  We can’t afford to stand still. 

We’re getting closer to an emissions reduction system, including pricing, that is fair and manageable for farmers and growers, but we’re not there yet. 

On the up side we’ve achieved alignment on a split-gas approach, recognising methane should be treated differently to Carbon Dioxide (CO2). 

The government’s listened to us and agreed that a farm-level system would be more effective in reducing emissions than including agriculture in the New Zealand Emissions Trading Scheme (NZETS).  

The Government’s also accepted that revenue from farmer levies should be invested back in the sector, to assist with emissions reductions and recognise efficiencies and mitigations on farm through incentive payments.

We can, and must, build on these gains.  

Because on the other side of the ledger, Partners are concerned about the impact of the proposals where the Government has modified the system we recommended back in May.  The main concerns are around pricing and ability to include sequestration. 

While we accept that the ultimate decision on setting emissions prices sits with Ministers, we put forward recommendations to make sure the impacts on farmers and growers were given appropriate weight in the decision-making process and checks and balances were in place to ensure the viability of the sector.

This is critical because the wrong decision here may put some farmers out of business.

We recommended an advisory body, made up of agricultural sector expertise, would look at a set of factors including progress towards emissions targets, what mitigation technology is available and what it would cost, and what the impact would be on farms and rural communities.  This body would use those factors to make a recommendation to Ministers on what the price would be.

But the Government’s proposal says factors such as socioeconomic impacts would be secondary to ensuring emissions reduction targets are achieved. This is not acceptable to the Partners. 

The Government’s own modelling shows that a relatively low price would be enough to achieve methane targets but would have a significant impact on sheep, beef and deer farmers. Again this is not acceptable, and we will be talking to Government about getting the right balance between reducing emissions and maintaining viable farm businesses.

Another area where the Government’s proposals need more work is in recognising sequestration.

He Waka Eke Noa proposed a carefully balanced system that took on-farm sequestration into account when calculating each farm’s levy bill.

We proposed that farmers would be able to ‘bank’ the sequestration from a wide range of vegetation including riparian planting alongside streams, woodlots and windbreaks as well as native forest.

The government’s proposing recognising a more limited range of vegetation, only a fraction of what is actually being sequestered on farm.   And it’s proposing rewarding farmers in the short term through contracts and in the long term through including this vegetation in the NZETS.

We need to take time to understand the practical impact of these changes and work with the government to ensure genuine sequestration is appropriately recognised. 

We’re taking the Government at its word that its “committed to building a system that works for farmers”. The Prime Minister’s signalled she’s ready to listen to us, acknowledging the proposal wouldn’t be perfect and saying she wants to hear about “unintended consequences”.

The He Waka Eke Noa Partners will be working hard to get the changes necessary to make the system better.  

I encourage farmers to get involved in putting forward your views on what will help you transition to the lower-emissions food production that customers and the community are looking for.

(published in Rural News October 2022)