We don’t know all the details but we do know that a Labour-Green government would impose new taxes on farming:
Green Party and Labour Party policymakers want to hit dairy farmers with a trifecta of environmental taxes that could cost an average of $18,000 per year for each farm, and for those farmers that draw water for irrigation the cost would be in excess of $63,000 per year, says DairyNZ chief executive Dr Tim Mackle.
“But unlike winning the trifecta at the horse races, there’s nothing for New Zealand’s dairy farmers to celebrate,” says Dr Mackle. “Our economists calculate that the proposed carbon tax would add an average of $6,850 to each farm’s costs, the nitrogen pollution tax would add $11,232 per farm – and then there’s Labour’s proposed water use tax which would add a further $45,000 average for farms irrigating.” He notes that of New Zealand’s 12,000 dairy herds, 2,000 use irrigation.
“The tax trifecta would severely reduce dairy farm profitability, and possibly require additional borrowing for some farmers to meet expenditure. It would impact the success of our rural economy, and put at stake the livelihood of our rural communities.”
It would also inevitably lead to an increase in the cost of food, and that’s without a land and capital gains tax.
Dr Mackle says if a political party had asked him what the dairy sector wanted from Government, he would have said an economy-wide plan outlining the emission reduction expectations for each sector over the longer term.
“Targeting farmers this severely and swiftly does little to incentivise mitigation, and ignores the hard work farmers have been voluntarily doing themselves to lessen emissions.
“Dairy farmers have been operating in a climate of uncertainty with no indication of when they would be faced with a charge for agricultural emissions. Despite this, we have put the Dairy Action for Climate Change plan in place so that all farmers now know what they can be doing right now to reduce their carbon emissions.”
He says the Greens’ leader James Shaw welcomed the climate change plan when it was announced in June.
“He’s well aware of the work currently underway. However, what might be a surprise to him is that we support the concept of a climate commission, and the idea of clear carbon budgets so the dairy sector can plan for the future.”
Dr Mackle adds that the Dairy Action for Climate Change plan is in partnership with Fonterra, and has the support of the Ministry for the Environment and the Ministry of Primary Industries.
“It dovetails with the work of the Biological Emissions Reference Group (BERG), a joint sector and Government reference group. BERG’s purpose is to build robust and agreed evidence on what farmers – that’s dairy, beef, sheep and deer – and the horticultural sector can do to reduce emissions, and to assess the costs and opportunities of doing so. BERG’s final report is due later on this year, and will be vital in informing future policy development on agricultural emissions.”
He says New Zealand is acknowledged as a world-leader for efficiently producing milk on a greenhouse gas per unit of milk basis, as reported by the United Nation’s Food and Agriculture Organisation.
“And we’re committed to doing even better, but it must be understood by everyone, including the Government of the day, that climate change is too complicated for each sector to attempt to address on its own.
“Rather than strongly taxing dairy, we want strong Government direction to get all sectors – rural and urban – to work together through an economy-wide plan to reduce New Zealand’s greenhouse gas emissions over the longer term.”
Brendan Moyle writing at Sciblogs has calculated the cost if agriculture is forced into the ETS:
. . . Some back-of-the-envelope calculations show putting agriculture into the ETS isn’t straightforward. Supposing the price of carbon is say, $16 per tonne, and 1 kg of beef protein takes the FAO average (see below) of 342kg of CO2 emissions. If a beef cattle yields 200-250 kg of meat (about 1/6th of which is protein), then that’s about 40kg of protein. That’s associated with about 13-14 tonnes of CO2. So that’s an additional cost of about $200 per beef steer. Any way you play with these numbers, the cost of sheep, beef and dairy farming in NZ is going to rise dramatically. . .
If the cost of farming increases dramatically profitability drops and the price of food will increase.
If emissions drop here it will be because herd numbers drop. Out competitors in other countries will take up the slack and global emissions will increase because they aren’t nearly as efficient as we are.
Until science comes up with ways to reduce emissions, forcing agriculture into the ETS is just tax for tax’s sake.
It will hit farmers and the New Zealand economy without improving the environment.
Rather than leading to environmental improvement it will lead to an increase in emissions in other countries whose governments are sensible enough to leave agriculture out of their emissions targets.