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.
- 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.