Deliberate or ignorant?

The government’s Action for healthy waterways has a lot to say about farming but was developed without any input from the industry groups like Beef + Lamb NZ, DairyNZ,  Deer Industry NZ, Federated Farmers and  Horticulture NZ.

It proposes new requirements that would:

  • strengthen Te Mana o Te Wai as the framework for freshwater management
  • better provide for ecosystem health (water, fish and plant life)
  • better protect wetlands and estuaries
  • better manage stormwater and wastewater, and protect sources of drinking water
  • control high-risk farming activities and limit agricultural intensification
  • improve farm management practices.

Eric Crampton points out that proposals could bankrupt some farmers.

 . . .Let’s step back and consider why strict targets without compensation are likely to cause a lot of bankruptcies. 

Farm purchases and dairy conversions are often heavily leveraged. Farmers will have borrowed to purchase the land and to put in the infrastructure improvements for irrigation and dairying. The selling price of the land, and the amounts that banks have been willing to lend, reflect the expected return that comes from the business. 

That return builds in certain expectations of the regulatory environment. 

Farmers have never had to pay for water directly. The value of water instead is reflected in the value of an irrigation consent tied to a piece of land. Research done earlier this decade suggested that land with an irrigation consent traded for up to fifty per cent more than comparable land without a consent. In other words, the value of the water was already incorporated into the selling price of the land. And that value will not have gone down over the intervening years.

A big change in the regulatory environment around water abstraction, or around allowable nutrient runoff or on-farm practices, would substantially change the cost calculus for already heavily leveraged farms. Costs go up, returns go down, and net cash flow is insufficient to pay the mortgage. Hello, bankruptcy. . . 

This isn’t fear-mongering.

The proposals are as drastic as the changes that precipitated the ag-sag of the 1980s.

Farmers are very aware of the costs and risks to their businesses. The government appears not to be worried about that, but have they taken into account the huge economic hit the country would take with the huge fall in production, and therefore export-earnings?

The paper was launched last week, consultation meetings have started, mostly in cities, and people have only six weeks to submit.

That is a very short time for people to read, absorb, reflect and respond let alone right in the middle of lambing and calving, the busiest time of the year for dairy, beef and sheep farms.

Is the timing deliberate or are those behind it simply ignorant of the demands placed on farmers in spring?

A cynic might think they know but don’t care.

The goal of clean water is one no-one should argue against but the government would have a much better chance of reaching it, without a huge economic and social cost, if it worked with farmers and their industry groups, and gave more time for them to come up with practical solutions.

 

4 Responses to Deliberate or ignorant?

  1. Tom Hunter says:

    They don’t care.

    You’ve got a century of ingrained Labour bitterness against farmers, dating back to “Massey’s Cossacks”, plus with the Greens and environmentalist movements propaganda hate campaign, plus the usual Leftist loathing of “rich pricks” who own land, plus the fact that Green-Labour are dead in most provinces, relying on a few urban areas to boost their party vote.

    But there is one final factor and it’s not rural but urban. For all the talk about lowering GHG emissions Green-Labour know that the costs of CO2 emission reduction would punch some big holes in the pockets of their voters and would eventually lead to some serious voting blowback.

    But methane? Now there’s a target that Green-Labour can really get stuck into, which is why we are the only country in the world to pay it any attention in The Paris Accords via our ETS. Were we to talk only of CO2 emissions then we’d look bloody good because of our largely non-industrial economy.

    I’ve been saying this for years, but given all these factors farmers were always going to be the perfect target for Green-Labour on the AGW issue.

    And of course who allowed the 2008 ETS to remain on the books, just begging to be weaponised? The National Party.

    And the connection to all the water stuff is simple: Green-Labour are well aware that farmers and farming will be put in a vice; what a great way of reducing overall herd numbers, the bluntest weapon in reducing methane emissions.

    BTW – it’s not just the leveraged conversions that will be in trouble. I don’t have a lot of debt but the bank has made it quite clear that no further extensions will be made if I just happen to have to build some covered, concrete feedpad because I’ve been ordered to by Council since that’s the only thing they can think of to reduce nitrate leakage.

    I won’t be bankrupted, not even close, but I will be forced to sell up.

  2. adamsmith1922 says:

    Reblogged this on The Inquiring Mind and commented:
    This post sets out another facet of Ardern and her government’s attack on the economy and farming. And Parker asks trust me.

  3. homepaddock says:

    Tom, if you, or anyone is forced to sell, who will want to buy knowing they’re going to be asked to do the impossible too?

  4. Tom Hunter says:

    True. And there is already talk of discounts, particularly on dairy farms.

    However, the problem is resolved if it simply means my farm is absorbed into a larger one that already has huge, covered feedpads and the like, which is almost certainly what will happen in our district.

    The land prices vs revenue simly cannot support my farm being sold as a stand-alone unit even now.

    And of course that’s what has already been happening.

    I think we’re slowly heading towards a US style of dairy farming: large, corporate, with waged workers (Hispanics there, Phillipinos here it would seem), cut-and-carry perhaps, and focused on 365 days of production.

    Ideas such as the Greens and Parker’s will accelerate that trend, which will be perfectly fine with them. I’ve never read of a situation where Big Business and Big Government did not rely on eachother.

    What it will do for rural populations and the schools and towns they support? Well…..

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