No benefit for farmers in ETS

May 4, 2008

Finlay Macdonald  in today’s Sunday Star Times reckons farmers will reap the benefits of New Zealand’s Kyoto policies. He is wrong on several counts.

 

Farmers were once the kings of New Zealand. …And then things began to shift… there came a dawning sentiment among an increasingly urbanised population that the farmer might have had it too good too long.

 

No, it wasn’t that farmers had had it too good – it was the realisation that subsidies didn’t work and the biggest beneficiaries weren’t farmers but those further along the chain from paddock to market. Proof of this is that when the subsidies were removed, most farmers were able to hang on through the ag-sag of the 80s and it was shearers, fencers, various contractors, freezing workers and others who serviced farmers or processed our produce who were hardest hit.

 

The removal of SMPs and special treatment in the 1980s was not mourned in the cities.

 

May be not in Auckland and Wellington because most people didn’t realise the impact plummeting farm incomes had on the wider economy. But provincial towns noticed. Just one small example of the devastating impact of the ag-sag is the automotive engineering apprentice who began his apprenticeship in 1988 with one firm in Oamaru which was forced to close, so he shifted to another which also had to close and finally served out his time with a third.

 

But of course they’re a resilient lot. Agriculture adapted, became leaner and more modern, learned new marketing skills. Rationalisations and amalgamations turned the meat and dairy industries into world-beaters. Wine arrived to add a little glamour. We all woke up again to the realisation that, for all the blather about knowledge waves, the fat of the land was still where it was at.

 

And still is.

 

And for all I know dairy farmers are back to driving Rolls Royces to the milking shed. Commodity prices have made them rich again (or at least able to pay off their debts) and given the economy a rosy glow.

 

Well, paying off some debt, yes; but also preparing for the future because while the milk price has gone up so too have wages and the cost of fuel, power, fertiliser and feed and they won’t come down when the price of milk inevitably does. And while dairying and cropping have been enjoying a long-awaited upturn, sheep and beef farmers have been facing drought and dismal prices.

 

It might not be fair, then, but maybe the poor old farmer is due for another round of public opprobrium – especially when it becomes more widely appreciated that already beleaguered consumers are again subsidising their country cousins, this time because of the politics of global warming rather than the considerations of national politics.

The merciless logic of climate change economics has already seen food prices soar, in part because arable land is being given over to so-called biofuel crops at the expense of other staples. Now we’re seeing the true costs of New Zealand’s Kyoto commitments being overwhelmingly handed on to ordinary households, small businesses and road users – none of whom have any meaningful ways of reducing their carbon footprints in a hurry – rather than those who can, such as farmers.

 

Farmers are ordinary households, small businesses and road users too so we’re hit just as hard as those in town – maybe more so because we don’t have the option of public transport.

 

There are huge doubts about whether the current regime will make any appreciable dent in New Zealand’s Kyoto targets anyway.

 

Yep and it will be doing little at great cost as Fran O’Sullivan points out in yesterday’s Herald there are several “reports by respected forecasters like Infometrics and the Institute of Economic Research that say the emissions trading scheme will have a major economic impact: 22,000 jobs gone by 2012, wages down by $2.30 an hour by 2025 and a cost to households of $600 a year by 2012, rising to some $3000-$5000 a year by 2025, depending on the international carbon price.”

 Agriculture’s claim that it cannot bear the immediate costs of such reform has been described in the past as a “convenient untruth” by the Council, which last year argued that the sector “can nearly halve its growth in greenhouse gas emissions since 1990 simply by applying nitrification inhibitors to dairy pasture”.

If it is true that by using such inhibitors to reduce nitrous oxide emissions farmers would also save on more expensive fertilisers currently used to fix nitrogen in the soil, then it’s obvious your average dairy farm has more emission reduction potential than your average suburban home.

 

I’ll concede Finlay some ground here. I’ve just spoken to a soil scientist who says that using nitrification inhibitors would reduce emissions by about 30%, but at a cost of around $140 a hectare which will impact on the price of milk which will in turn impact on households.

 

In effect, by not having to change, farmers are getting a $1.3 billion subsidy from other taxpayers footing the Kyoto bill.

 

No, the rise in the price of fuel and power will hit our businesses too and let’s not forget that agriculture will be putting $12.5 million over the next five years in to the Pastoral Greenhouse Gas Consortium in an attempt to solve the problem of methane emissions from ruminants.

 

Most people, of course, glaze over at the technocratic voodoo behind Kyoto calculations. The whole notion of capping and trading carbon credits is based on conventional economic ideas about producers and consumers being “incentivised” to conserve energy, reduce emissions and reward green industries through a price mechanism that punishes polluters, directly and indirectly…But being asked to subsidise the environmental costs of producing goods we’re already struggling to afford in the first place doesn’t sound very sustainable to me.

 

 

The root of the problem lies in the Government’s really stupid decision to include agriculture in our Kyoto commitments. That recognised that the bulk of our emissions are from agriculture.But no other country is including agriculture and even more stupidly by doing it we’ll increase global emissions. If we shot every sheep and cow in the country the world’s emissions would go up as other countries strove to increase their production to make up the shortfall because we produce much more milk and meat more efficiently with less carbon emissions than any other place in the world.

 

But then if the answer  necessitates  more bureaucrats, paper work, regulations and costs with few if any benefits then you’ve asked the wrong question. And that’s the problem with the Kyoto Protocol – it will cost a lot but will simply shift production without solving any problems – if indeed there is a problem with climate change to begin with. And as Poneke pointed out on Friday that’s still under question.

 

 


Duck shooting

May 4, 2008

We woke to intermittent volleys of shots yesterday and the shooters on our ponds reported an opening morning tally of 107 ducks. They were back again last night, much to the discomfort of Pepper – the working dogs are unperturbed by  gun fire, but in spite of his Labrador genes the playing dog hates loud noises and spent the day very close to the house.

 

There were no human casualties yesterday, although one shooter courted hypothermia when he stripped off and swam across the pond to win a bet which gave him free beer for the night. The silence this morning suggests he wasn’t the only one to have a big night, or perhaps it’s just the first hard frost of winter that’s kept the shooters in bed.


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