Push up food prices, put down farmers

Justified fears farmers have about the dangers of a LabourGreen government were confirmed by David Parker’s announcement of Labour’s environment policy:

Labour would axe the $400 million Crown Irrigation Fund to kick-start private irrigation schemes . . .

While honouring any contracts already in place, Labour would replace the Crown Irrigation Fund, established from the proceeds of state asset sales, with a freshwater pricing regime to encourage economically marginal irrigation schemes.

“With a new irrigation proposal where the economics are just breakeven, as they often are, then maybe the price of water for the first 30 years is next to nothing,” said Parker. . .

Irrigation NZ said the policy would push up food prices and cripple farmers.

Irrigation New Zealand (INZ) is not convinced that Labour has fully considered the implications of a tax, or resource rent, for irrigation. Particularly how such a mechanism would be practically implemented. 

Many water takes involve combinations of irrigation, hydropower and domestic supply such as the Opuha dam or the Rangitata Diversion Race – how will these complex takes be split apart to allow for irrigation related resource rents?

More importantly it is not equitable to do so given that private energy companies, Trustpower for example, and commercial business connected to domestic water supply systems also prosper from the use of water. A resource rent will mean increased cost for domestic water supply and electricity alongside food price increases – such a tax would therefore impact upon low income earners the most.

Yet another way in which a LabourGreen government would increase costs for households and producers.

Additionally, this increased cost to the farmer will impact production and importantly prevent farmer investment in improved environmental management to meet the water quality limits now in place in a number of regions. Ultimately it will see the demise of the traditional NZ family farm.

Despite Mr Parker’s statement that irrigation is funded by subsidies, this is not the case. The Crown Irrigation Investment Fund is an investment company receiving market returns – for example the recent $6.5million loan to Central Plains Water. New Zealand does however need to consider the benefits of subsidising modern irrigation scheme development, it would allow increased farmer investment in improved environmental management enabling them meet new standards more quickly.

Mr Parker’s comments that irrigation is a wealth transfer that only benefits rich land owners is disingenuous. Irrigation is well proven to benefit everyone – multiple independent socio-economic studies both in New Zealand and overseas demonstrate this. Because of the consensus view In New Zealand that our waterways are important and integral, all proposed irrigation schemes in New Zealand incorporate sustainability and environmental improvements.

Irrigation schemes provide infrastructure that allows opportunity for communities to grow. The reality is irrigation underpins thousands of jobs and entire communities in New Zealand, whilst also ensuring we have affordable food available on our tables. Blenheim, Ashburton, Timaru and Oamaru are all prime examples of this.

Parker spent a term as MP for Otago, which included Oamaru, and he ought to understand the benefits irrigation has brought to the whole district.

Sustainable solutions and environmental safeguards – many driven and agreed on by the 62-member Land and Water Forum – have begun in earnest: with compulsory water metering, stock exclusion from waterways and water quality limit setting. As a result in excess of $2billion ($5,000 per hectare) has and continues to be spent on converting flood and older spray irrigation systems to modern centre pivot irrigators.

These measures already in place will help ‘clean up’ dirty rivers and lakes over a generation; increases in intensity of land are already being controlled through nutrient allocation limits imposed on irrigators; and improvements to farm practice are already underway to offset environmental burdens caused by intensive farming.

INZ agrees with Mr Parker that New Zealanders can have their ‘cake and eat it’ – good water quality and a vibrant farming economy is achievable with a better defined environmental management framework for irrigators to operate within. Reducing uncertainty is key as it allows for investment. The future is about developing policy that enables irrigators to invest in the latest technology to improve water use efficiency and decrease their impacts on water quality.

Fairly funded and properly regulated irrigation is needed to achieve the next level of prosperity and sustainability in New Zealand.

Labour’s policy reinforces its ignorance of rural New Zealand, its needs and its issues.

It would impose extra costs and put more hurdles in the way of rural communities which are trying to drought-proof themselves.

We need more irrigation not less for the economic, environmental and social benefits it brings.

 

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