NZIER: water taxes will suck Otago & Canterbury dry

September 18, 2014

Water taxes could become a regional tax on Canterbury and Otago, seriously impacting those regional economies.

This is the conclusion of a New Zealand Institute of Economic Research (NZIER) report for Federated Farmers.

Care needs  to  be  taken  when  considering  taxing  competitive  agricultural  sectors since  countries  which  have  done  so  without  strong  justification  have  performed poorly (e.g. Argentina).

While there is little policy relevant data to tell us how much water is being used by the rural sector, preliminary estimates suggest that for every cent (per cubic metre of water) the rural sector is charged, $39 million will be taken out of rural communities.

This assumes  that  the  policy  is  enforceable  and  that  any  exceptions  could  be adequately  accommodated.1

Further, if  focused  on  irrigation  only,  the  tax  will predominantly fall on Canterbury and Otago  water users  (see following table), while traditional dairying areas such as Taranaki and Waikato will pay a minimal water tax.

While water  quality  is  reasonably  good,  maintaining  water  quality  is  a  major challenge that needs  to be overcome  with the  spotlight firmly on non-point  source agricultural run-off. Farmers need to be proactive in addressing this issue or others (e.g.  over-zealous  regulators, foreign consumers)  will do so  instead, possibly in ways that are less efficient for farmers and the country than an industry-driven initiative.

Doing nothing about water quality  is  not a sensible  option.  Neither is rushing ahead without sufficient information.  

But this is not a new problem. New Zealand can learn from other countries’ water quality regulatory experiences here and hopefully avoid making their mistakes. Some key lessons are:

  •  Addressing water quality that impacts on agriculture is a long term game. Rash decisions made now could have significant and costly unintended consequences
  •  Use science to determine minimum flows to sustain healthy water ways, and be flexible and adaptive in the management of the environment as scientific knowledge improves
  •  Using markets to allocate water between competing uses can be efficient and effective when conditions allow, but be aware that market forces alone will not solve all problems
  •  Water taxes will not be an effective allocation mechanism if significant physical, regulatory or information barriers exist. Specifically, further work is required in understanding the detailed water use trade-offs since we lack the necessary policy-relevant information, data and institutional capability
  •  Where possible, including urban areas within the same water allocation and trading framework will improve efficiency. . . .

It compares the policies of the National, Labour and Green parties and says:

There certainly  needs  to  be  a  step  up  in  primary  sector  –  and  other  sectors’  – responsiveness to this issue. But durable, effective water  trading  solutions take time to develop and must be based on robust analysis and facts, not rhetoric and ideology.

Voters should  be  wary  about  promised  policy  outcomes  when  the  evidence  base around  the  economic,  environmental,  social  and  cultural  impacts  of  the  proposed policies is far from complete. . .

There are no credible arguments against the importance of good water quality, the need to prevent degradation of water ways and clean up the dirty ones.

But imposing a water tax on Canterbury and Otago farmers to address problems all over the country, some of which have nothing to do with irrigation or farming, is not the answer to poor water quality in some areas and will create other problems.

It will also impose huge costs on a relatively small number of farmers in two regions:

“Let’s not kid ourselves that the road Labour and the Greens are travelling down with Water Taxes, looks more like regional farming taxes to us,” says Ian Mackenzie, Federated Farmers Environment spokesperson.

“The NZIER have calculated that a water tax of one cent on every cubic metre (m3) of water used for irrigated and stock purposes, means $39 million would need to be paid by farmers. 

“While Labour and the Green Party won’t confirm what they are considering, in 2011, the Greens campaigned on ten cents a cubic metre.

“If that happened then Canterbury’s farmers would foot 62 percent of the cost ($248 million) while 21 percent of the cost would fall on Otago’s farmers ($82 million).  Those two regions being where most of New Zealand’s irrigation happens.

“This represents something like a 13 percent bite out of agricultural GDP in Canterbury and 12.5 percent out of Otago’s agricultural GDP.  That’s one heck of a wallop and for what?

“These taxes have little to do with the political rhetoric of tackling water quality. There are plenty of regions with little or no irrigation, which have water quality challenges due to agriculture, industry and municipal influences.  

“It seems more about revenue generation to plug big spending promises and farmers, horticulturalists and vintners in Otago and Canterbury are being lined up to foot the bill.

“There’s no mention that these same businesses already pay thousands of dollars each year in ‘taxes’ to regional and district councils for the privilege  of accessing water.

“It doesn’t take a rocket scientist to work out that water taxes will only drive up the cost of food production, especially locally grown fresh vegetables and fruit.

“Are Kiwis really prepared to gift our domestic food market to other countries by pricing ourselves off the market?

“Labour and the Greens claim it will drive better and more efficient use of water. Well they are too late. Over the past ten years or so, farmers have been spending hundreds of millions of dollars upgrading on and off-farm irrigation infrastructure to more efficiently use water.

“This is plainly obvious for all to see in Canterbury with the proliferation of centre pivot irrigators.  With each one costing some $250,000, they allow the farmer to use substantially less water producing more food and fibre over traditional border dykes.

“There’s only so much money to go around for farmers to invest.  These proposed tastes will only slow down or stop a farmers’ ability to invest in new technologies.

“You’ve got to remember that we’re only using a fraction of New Zealand’s renewable freshwater resource, but the proper word is renewing.

“As the NZIER also notes, there are large informational, institutional and implementation gaps on water taxes. In our view, water tax proposals should have ‘use with caution’ in flashing red lights.

“If you want an example of a country with ill-founded and ill-thought out taxes that are like a wrecking ball through the primary industries then Argentina provides it.  Dr William Rolleston visited it earlier this year and saw for himself how everyone loses out there.

“By attacking Canterbury and Otago irrigators, there is such a dislocation between who you tax and the problem you want to solve, that the only thing you hurt is the economy.

“That’s why the media, politicians and commentators need to heed NZIER’s advice that, “care needs to be taken when considering taxing competitive agricultural sectors since countries which have done so without strong justification have performed poorly”.

“With some trading partners increasingly believing we are not responsibly harnessing our water resources to guarantee production, this is no place for policy experiments,” Mr Mackenzie finished by saying.

We don’t need an expensive experiment the direct costs of which will be carried by a relatively small number of farmers and the indirect costs of which will impact on Otago and Canterbury.

We need more of what’s already working.

This includes independently audited environmental plans for farms, which is what the North Otago Irrigation Company requires of all its water users.

Farmers already had lots of reasons to vote for another National-led government. This report provides them with more.


Rural round-up

September 13, 2014

Farmer keen to give something back – Andrea Fox:

When you are nudging 65 and co-running a 900-cow herd, a 1600-dairy goat operation and developing a forestry venture after more than four decades of farming, what is left to achieve?

Plenty, if you are north Waikato farmer John Fransen and want to give back some hard-earned knowledge and the wisdom invested in you by other farmers. 

So Fransen, a Tauhei farmer, has made himself available as a mentor in DairyNZ’s Connect programme. . .

National’s freshwater fund gets support – Annette Scott,

Environmental compliance is inescapable. Annette Scott looks at progress in the country’s newest dairy regions.

Federated Farmers has been working with DairyNZ to analyse the $100 million freshwater fund policy announced recently by the National Party.

The outcome has been positive, with both parties agreeing the fund could deliver improved water quality around New Zealand.

Federated Farmers believes NZ Landcare Trust and Queen Elizabeth II National Trust can both play key roles in delivering the new fund. . .

Nats to focus on Maori farmland – Alan Williams:

Giving more control to owners of Maori farmland to boost productivity is one plank in the National Party’s plan to boost the value of primary sector exports to $64 billion from the current $38b by 2025.

Research showed more than one million hectares of freehold Maori land was not being farmed to its potential, the party said in its primary sector election policy. 

Encouraging Maori economic development and farm productivity improvement could create up to 3600 extra jobs and provide about $8b in additional exports, it said. . .

Study of South American Agriculture Good Reading for Kiwi Farmers:

A report produced by Gordon Stephenson trophy-winners Craige and Roz Mackenzie gives a fascinating insight into South American agriculture, says Simon Saunders, acting chair of the NZ Farm Environment (NZFE) Trust.

In April this year the National Winners of the 2013 Ballance Farm Environment Awards travelled to Argentina, Chile and Uruguay to study arable farming, dairying and beef production.

Facilitated by NZFE Trust, the 28-day tour was the official offshore component of Craige and Roz’s role as ambassadors for the Ballance Farm Environment Awards. The primary focus of their trip was to promote New Zealand’s position as a leader of sustainable farming techniques and to gain “an understanding of South American farming systems and the impact new farming technologies are having nationally and within the farm gate”. . .

Triple treat calving surprise -

Maria Franklin got the surprise of her farming career when she checked on her springer cows yesterday.

The Dargaville farmer was pleased to see one calf lying on the ground a couple metres away from its mother, while the cow was in the process of giving birth to another.

”Pleased” turned into great surprise when she noticed black hair behind a mound of grass which turned out to be a second calf.

”I had to look around to check for any other cows but I already knew they were all hers,” she says. . .

Rabobank appoints environmental sustainability specialist:

Rabobank New Zealand has announced the appointment of environmental sustainability specialist Blake Holgate. Rabobank head of business development New Zealand, Karen Kenny said Mr Holgate brought considerable resource management expertise to help Rabobank clients achieve their business and sustainability goals. Ms Kenny said Mr Holgate’s appointment – to the position of rural manager Sustainable Farm Systems – was among a range of initiatives the bank was undertaking to assist clients and the wider agricultural sector meet the challenges of maintaining competitiveness while adjusting to current and future environmental regulation. . .


Rural round-up

September 12, 2014

Coasters nervous about a dry start to spring:

Nervous West Coast farmers are hoping meteorologists are right that a rainmaker is close at hand, with no more than 1 millilitre (mls) falling at Westport over the past 23 days.

“This is the driest start to spring in some years,” says Katie Milne, Federated Farmers West Coast Provincial President.

“Apparently a dry spell is 15 consecutive days with less than one millilitre of rainfall and the South Island has been very dry. Heck, even Milford Sound has been dry for going on 22 days.

“Speaking to the guys at MetService, they say it is down to a persistent high, which has been sitting out to the west that’s meandering its way across the country. . .

 

Turners & Growers enters Chilean JV to grow grapes for first time – Suze Metherell:

 (BusinessDesk) – Turners & Growers, the fruit marketer majority owned by Germany’s BayWa, has entered a joint venture with Unifrutti Chile to grow and export Peruvian grapes.

The joint venture with Italian-owned, Chile-based Unifrutti builds on an existing export relationship with T&G, and is the Auckland-based company’s first foray into grape growing. T&G didn’t disclose any financial details surrounding the deal, saying it will begin planting in Peru later this year with first commercial volumes harvested in late 2015.

T&G’s Delica business already exports grapes and has existing operations in South America, though those haven’t extended to grape growing before. The company already had a commercial relationship with Unifrutti, which is ultimately owned by the Italy-based De Nada International Group, according to its website. . .

Waikato Sharemilkers Enjoy Benefits of Farm Environment Competition:

Entering the Waikato Ballance Farm Environment Awards was a great way for Matamata sharemilkers Phil and Kim Dykzeul to find out how their operation stacked up in terms of environmental sustainability.

The Dykzeuls, who 50:50 sharemilk 200 cows on 83ha owned by Richard and Pauline Kean, were thrilled to win three category awards in the 2014 Waikato Ballance Farm Environment Awards (BFEA), including the LIC Dairy Farm Award.

“We were over the moon to win three awards in our first time in the competition,” says Phil. . .

 Important season for black-grass eradication:

With the second season of black-grass operations about to begin, continued vigilance this spring and summer will be crucial to stop the noxious weed from establishing in Mid-Canterbury, says the Ministry for Primary Industries (MPI).

MPI, supported by industry partners, began a black-grass response following spillage of contaminated seed from a truck travelling between Ashburton and Methven in July last year.

“We didn’t find any black-grass last season and are confident that if it were there the operations team would have found it,” says MPI Response Manager Brad Chandler.

“However, we are also very conscious that if there is any chance of black-grass appearing, it is most likely to show its face this season. So everyone involved, including the public, needs to remain particularly vigilant and keep a lookout.” . . .

Live Lobsters Fly to Export Success:

An increasing volume of valuable export earnings are being generated by the Fiordland Lobster Company (FLC), following its successful pioneering of the live lobster export industry over the past 25 years.

Now exporting about over 800 tonnes of the Kiwi Lobster-branded product (officially known as Jasus edwardsii lobster) each year, the firm’s achievements have been founded on efficient air freight and a well-oiled logistics operation, says FLC group general manager sales and marketing David Prendergast.

“This lobster is considered the sweetest tasting and most succulent variety available and is highly sought after in Asia, where it is the lobster of choice,” he says. . . .

 

 Wool Market Makes Gains:

New Zealand Wool Services International Limited’s Marketing Executive, Mr Paul Steel reports that at today’s South Island sale there were market gains of up to 2 percent on the back of recent business concluded mainly with Chinese interests.

A limited Merino offering saw best top making types slightly in buyers favour and poorer styles mixed and irregular.

Mid Micron wools when compared to the last South Island sale on the 28th August generally made small gains. 24.5 and 25 micron were firm, 25.5 to 26.5 and 29 to 30.5 micron were 1 to 2 percent dearer while 27 to 28.5 micron were buyers favour. . . .


Rural round-up

September 11, 2014

Farming for the future – Patrick O’Boyle:

Agriculture is the national breadwinner, accounting for 12 per cent of our GDP. But, making up nearly half of our greenhouse gas emissions, it is also a major reason we have struggled to meet the challenge of bringing down our emissions. For Patrick O’Boyle, the way out of this tight spot is not to demonise our farming communities, but to recognise that progress comes when we work together.

Dairy, and meat and wool. These have been the livelihood of my family. Our history of living in the land spans a large part of the North Island and involves a significant contribution to these two industries. We now live on a sheep and beef farm in the Wairarapa, where we operate a successful farming business.

My connection with the land has always been deeply seated in certain values: a respect of the land and animals, personal responsibility, and an ambition to succeed. As farmers, we see ourselves as caretakers, and with this comes a responsibility to make effective use of the land and hand it on to the next generation. . . .

Patrick O'Boyle's photo.

South Island needs rain - Stephen Bell:

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues.

It had not got to the adverse event stage but farmers needed rain soon, Federated Farmers adverse events spokeswoman Katie Milne said.

Farmers on the West Coast were starting to get a bit desperate. Some had used up their winter feed reserves and weren’t looking too flash.

A few farmers were finding it tough with lower pasture cover after the Easter windstorm and a series of frosts. . .

Strong contenders for Enterprising Rural Women Awards 2014:

Seventeen exciting and innovative businesses are in the line up for the Rural Women New Zealand Enterprising Rural Women Awards 2014.

“This is the sixth year we’ve run the Enterprising Rural Women Awards,” says Rural Women National President, Wendy McGowan. “It’s encouraging to see the diversity of businesses being run by women in rural areas and the significant contribution they make to the wider economy.

“Each year we see an greater sophistication in the marketing and presentation of rural businesses that enter the awards.

“As broadband slowly rolls out into rural communities it is increasing business opportunities and levelling the playing field for rural enterprises, even when operating from remote locations. . .

 The glamorous face of farming – Genevieve Barlow:

THERE they were, two glamorous women in heels high enough to fall from, babbling about agriculture, and the power of art to promote farming.

The younger one, Hannah, wore silver shoes. Her mentor, Lynne, wore red ones. We were in the city so, yes, there was occasion to dress up but boy were these women relishing their glitzy shoe-wearing moment. Their sartorial chutzpah in the shoes department nearly blew me off my flat-heeled boots.

So what do farmers look like these days? Yesteryear’s straw-chewing, Akubra-wearing, down-on-his-luck laconic type, while romantic, no longer tells the story in full.

That’s what these glam gals were out to prove.

They walk into classrooms and public places sometimes looking more like they’re lining up for the red carpet (in the shoe department, at least) than a talk about cows and farms. . . .

 

 

Blanket Bay named in Andrew Harper’s Top 20 International Hideaways:

Luxury lodge Blanket Bay has again received a prestigious accolade – named as one of the world’s Top 20 International Hideaways in the famous Andrew Harper’s Hideaway Report.

Blanket Bay, near Glenorchy, was ranked 16th in the just-released 2014 list of favourite hotels, resorts and lodges, as voted by Hideaway Report readers. The Hideaway Report is an internationally-recognised source of information about luxury travel.

The Andrew Harper website describes Blanket Bay as a “splendid sanctuary along the shores of Lake Wakatipu with a majestic backdrop of snowcapped peaks; a scenic 45-minute drive from Queenstown”.

New Blanket Bay General Manager Brent Hyde says the award rightfully belongs to the Blanket Bay team under the direction of previous General Manager Philip Jenkins, but he’s delighted with the continued recognition of the outstanding property. . .

 


Water tax ludicrous and detrimental – IrrigationNZ

September 11, 2014

IrrigationNZ says the Green party’s water tax is ludicrous and detrimental:

. . . “Introducing a water tax will be ludicrous and detrimental for the country,” says Andrew Curtis, IrrigationNZ CEO. “The only robust and long term solution to restoring waterways is on a case-by-case basis engaging local communities to find solutions.”

IrrigationNZ agrees with the Green Party and with the National Party that stock must be excluded from waterways, riparian margins established and nutrients and contaminants need to be managed.

In addition, pest plant and fish species also have to be controlled to restore the natural habitat and most importantly – water storage and irrigation infrastructure needs to be developed within limits.

“If irrigation becomes too costly fewer farmers will implement it and water storage infrastructure will not be developed,” says Nicky Hyslop, IrrigationNZ Chair. “It would be foolish for New Zealand not to capture its most valuable resource, the world’s most valuable resource, just for the sake of punishing farmers.”

IrrigationNZ would like to re-iterate the following points:

• A water tax will lead to increased food prices and is inflationary

• In no other country in the world is there an irrigation tax

• In all other countries irrigation is considered a socio economic tool and is funded centrally

• The Green’s policy called: Smart Farming for Clean Rivers – ignores that some of the most polluted waterways are urban ones due to sewerage problems

• A water tax on irrigators is not equitable, all users if water, industrial and hydro electricity plants should be included

• A water tax as Green and Labour want to implement will not prevent land intensification – it will instead encourage it – farmers will have to seek higher returns to justify the increased cost of their water

• The water policies do not define what kind of ‘irrigation’ is taxable, or what size of water take is taxable

• A water tax will reduce money available for farmers to continue mitigating environmental impacts through new technology and nutrient management systems

• Irrigators are already spending billions of dollars of private investment improving our waterways

IrrigationNZ is committed to finding a way for New Zealand to develop sustainably managed irrigation schemes within acceptable environmental limits.

“Water is our most valuable renewable resource and we believe that irrigation in New Zealand is essential to protect against climatic variations and to enhance the country’s ability to feed its population and to contribute to feeding the world,” says Mr Curtis.

The Green policy is anti-farming, anti productivity and will penalise the majority of irrigators who farm responsibly to clean up after the minority who don’t.

 


How much will people pay?

September 9, 2014

A correspondent to the Otago Daily Times, rev Steve O’Connor, (not online) asks:

Is it stupid to try to clean up our rivers and lakes inside a generation? Is it stupid to aspire to having all rivers and lakes swimmable, fishable and suitable for food gathering? Is it stupid to have regulatory safeguards and charge a little bit for large water takes for irrigation? . . .

We don’t have to choose between a thriving primary industry and clean water. We can have both. . .

To which Ian Mackenzie, a Federated Farmers board member responds:

The question Rev Steve O’Connor should be asking is how much he is prepared to pay in extra rates to clean up the Leith to swimming standards? that is to the standards of Moana Pool.

At the moment, run-off from the streets of Dunedin contaminates the Leith to about four times the acceptable level of E. Coli for safe swimming.

That has nothing to do with farming but it is he and the greater population of North Dunedin who are responsible.

I can now swim safely in the creek that flows through my farm because for years we have been investing in stock exclusion and riparian planting to ensure good water quality .

What did the rev O’Connor’s boss say about ‘he who is without sin’?

It is possible to have a thriving primary industry and clean water.

It is also possible to have clean water in urban areas but it will take time and money to achieve the high standard required for food gathering and swimming in many places.

How do the urban people so keen to have farmers – who by and large are already doing their bit to clean up the waterways they border – pay more, feel about paying to clean up waterways in their towns and cities?


Rural round-up

September 8, 2014

Ballance Farm Environment Awards Show Farmers Care:

Bay of Plenty dairy farmer Trevor Hamilton entered the Ballance Farm Environment Awards because he had a point to prove.

Trevor and his wife Harriet run a large-scale family business that spans ten farms – five in Canterbury, four in Bay of Plenty and one in Hawke’s Bay. The operation is on track to produce three million kilograms of Milksolids this season, with four million targeted for 2015/16.

Starting from scratch as a sharemilker in 1980, Trevor says his aim is to create an intergenerational dairy farming business. But he is acutely aware that the scale of the operation opens it up to claims that its growth has come at the expense of the environment.

Entering the Ballance Farm Environment Awards gave him the opportunity to prove this wasn’t the case. . . .

NZ possum hits fashion catwalk –  Sally Rae:

With apologies to Dame Edna, it’s Goodbye Possums.

New Zealand’s possum fur industry is estimated to be worth $130 million annually to the country’s economy.

Perino, a blend of possum fur and cashmere or merino yarn, recently featured on the catwalk in garments from the latest collections from Zambesi and The Noble Savage. . .

Lavender: The sweet smell of success - Sally Rae:

Two novice lavender growers from Central Otago nearly stole the show at this year’s New Zealand Lavender Growers Association awards.

In the oil competition, Joth Hankinson and Tony Culshaw, from Central Otago Produce, won two of the three trophies on offer – the Eoin Johnson Memorial Trophy for best lavandin oil, and the Ken Wilson Memorial Trophy, for best grosso.

Two particular types of lavender were grown commercially for oil – angustifolia or English lavender, and intermedia lavender – also called lavandin – a hybrid cross between an angustifolia and a latafolia, which grows in the wild at higher altitudes in the Mediterranean. . .

Drone big success on and off the farm - Rob Tipa:

A Southland family pioneering the use of drones on New Zealand farms believes there is a massive gap between the science, research and technology available today and its application on farms.

Neil Gardyne and his 14-yearold son Mark made television and news headlines internationally last year when they started flying drones over their 466ha hillcountry farms in the Otama Valley in Eastern Southland.

Instead of climbing on a quad bike twice a day to check on hogget lambing, the Gardynes programmed a drone to cover the same ground from the air. What took them two hours on a bike opening and closing 120 farm gates, took 20 minutes flight time for the drone. . .

No growth benefits shown with docking - Sally Brooker:

Docking lambs’ tails has no long-term beneficial or detrimental effect on lamb growth rates from docking to slaughter, a new study has found.

Alliance Group Ltd, one of New Zealand’s largest meat processing companies, Beef and Lamb New Zealand and the Ministry for Primary Industries Sustainable Farming Fund commissioned the research after farmers wondered if leaving tails intact improved lamb growth rates from docking to slaughter and British retailers had started asking about tail length.

AbacusBio consultant Jo Kerslake presented the results at a Beef and Lamb field day in South Canterbury last week. . . .

 Rustling must be stopped – but how?  – Jon Morgan:

    I suppose running sheep in a park in central Auckland is asking for trouble. The temptation of a week’s meals there for the taking is too much to expect the big city’s criminal element to ignore.

In the latest of a string of incidents, rustlers using dogs and traps targeted the 600-ewe flock in Cornwall Park.

Members of the public disturbed three men and three large dogs capturing new-born lambs. And last month rustlers stole at least six sheep – including two pregnant ewes and a large ram – from the park’s farm.

A heavily pregnant ewe was caught in a leg-hold trap but spotted by a member of the public before it could be taken.

Another ewe that was due to give birth to triplets disappeared two days earlier and three more ewes and a 110kg ram were taken a few months earlier. . .


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