ETS costs too high for agriculture

The costs from the proposed emissions trading scheme   will erode any improvement in red meat schedules and dairy payout.

This and other adverse impacts have prompted industry groups to call for more time to voice their concerns about the ETS amid widespread fears it will crush competitiveness for no environmental benefit.

There is absolutely no point in imposing costs on primary industry, or any other sector, if there is not going to be a measurable environmental benefit.

As the first country to include agriculture in such a scheme, the sector says its concerns have not been taken into account, prompting a pan-industry letter sent to Parliament calling for another chance to make submissions.The latest independent analysis of the scheme in its current form shows sheep, beef and deer farmers will be ‘hit hard’ by the ETS – much more so than their dairy counterparts.
Detailing a range of indicative costs for 2030 – the year when agriculture will pay full carbon emissions expenses – National Bank rural economist Kevin Wilson shows the cost of greenhouse gas (GHG) emissions per kilogram of product sold would be 38c for meat producers compared with 21c for dairy.
Given the dairy payout is historically higher per kilogram of milksolids than a kilogram of meat, it means sheep, beef and deer farmers would pay a higher proportion of income into offsetting emissions than dairy farmers.

The cost of emissions per hectare would equate to $185 for dairy and $84 for sheep and beef. Dairy also has a higher GHG cost per stock unit at $74, compared with $8.40 for sheep and beef.

Wilson told Rural News many variables will determine the ultimate costs, but the fundamental question is why New Zealand has agriculture in its ETS plans when no other countries do.
 
There is no satisfactory answer to this question, especially when New Zealand’s extensive grazing systems put us among the most productive producers of protein with the lowest carbon emissions in the world. 

He says 2018 – when agriculture would enter the scheme – is actually a lot closer that it seems given the changes that would need to be implemented: ‘Now is the time to start preparing potential management options.’Meat & Wool NZ chairman Mike Petersen is not surprised to hear the ETS costs to dairy farmers are lower because they generally sell more product and at a higher price.
But his major and immediate reason in pushing for change to the scheme is that New Zealand is the only country in the world to put agriculture in an ETS. ‘It’s a real concern to us,’ he says.
‘That’s why we are arguing there needs to be some recognition of the competitive factors that New Zealand agriculture will face as a result of being the only country in the world to do so.’

MWNZ was one of 14 industry groups calling for the chance to provide further submissions to the Climate Change Bill recently amended by the Finance and Expenditure Select Committee.

Petersen is concerned the ETS goes beyond meeting the nation’s international obligations, and warns carbon neutrality is not a sustainable long-term goal for New Zealand’s sheep and beef industry.

Another worry is ‘trade-offs’ being made in Parliament to pass the bill before the election, says Petersen.

Keeping Stock wonders if Helen Clark’s support of Winston Peters this week is because she needs his support fot the bill.

Wilson’s calculations are based on a conservative carbon cost of $25/tonne, plus stocking rates of 2.5 cows/ha for dairy and 10 stock units/ha for sheep and beef. It takes fertiliser application of 500kg/ha for dairy and 50kg/ha for sheep/beef, production of 875kg of milksolids/ha and 220kg of meat and fibre/ha, along with 7.4t of CO2 equivalent per square hectare emitted for dairy and 3.4/ha for sheep and beef.
 
No-one knows what the cost will be, it is unlikely to be lower but it could be much higher.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: