Rural round-up

June 24, 2014

Optimistic over farming sector’s future – Sally Rae:

Federated Farmers national president Bruce Wills stands down next month after three years in the role. He talks to agribusiness reporter Sally Rae about his tenure and his optimism for the agricultural industry’s future.

His desk might have been cleared in Wellington but New Zealand’s farming community can be assured they have not seen the last of Bruce Wills.

After three years at the governance helm of Federated Farmers and a prior three-year tenure as meat and fibre chairman, his involvement, following the organisation’s annual meeting on July 4, will only be as a ”very loyal” member. . .

Why a carbon tax is udderly useless to us – William Rolleston:

The overwhelming scientific consensus is that human activity, including agriculture, plays a significant role in climate change.

Yet the Green Party’s proposal to tax biological emissions is bad policy for climate change and the economy.

Along with every other New Zealander, farmers already pay for their carbon-dioxide emissions in the current Emissions Trading Scheme. The issue, the Greens argue, boils down to biological emissions in the form of methane and nitrous oxide.

Methane is a powerful but short-lived greenhouse gas generated by bacteria in the stomach of farm animals. It lasts around seven years before being converted back to carbon dioxide which is taken up by plants. The methane cycle is complete when animals eat those plants in turn. Methane is measured as kilograms of carbon dioxide based on a 100-year time frame.

This time frame has been chosen by international agreement but any period could have been chosen. . .

Harriet takes on shepherds challenge – Sally Rae:

Harriet Gardner admits she might not be the ”fastest in the world” at it – but she can shear a sheep.

That skill will be crucial when Miss Gardner (20) takes part in the preliminary round of competition at the World Young Shepherds Challenge at Lincoln from July 3-5.

The competition will be held alongside the ANZ Young Farmer Contest grand final events. It will consist of shearing, condition scoring, a quad bike obstacle course, identifying sheep breeds, feet trimming, drenching, counting sheep and demonstrating knowledge ofthe sheep industry. . .

$75m for NZ-Singapore ‘Foods for Health’ projects:

Science and Innovation Minister Steven Joyce today announced that the Government will invest NZ$1.75 million to fund New Zealand-Singapore collaborative research projects on the development of food products with validated health benefits. 

New Zealand’s investment will be matched by Singapore’s Agency for Science, Technology and Research (A*STAR), bringing the total investment amount to approximately NZ$3.5 million over two years.

“One of the goals of the Business Growth Agenda is to grow exports from 30 per cent to 40 per cent of GDP by 2025. Continuing to develop our innovation in the food science and technology industry will be a key contributor to achieving this,” Mr Joyce says. . . .

A champion for farming :

Fiona Hancox’s father was Colin Richardson, a man who started life as a townie, before eventually owning 12 West Otago farms as well as being extensively involved in farming politics.

Although the son of a tailor, he decided at an early age he wanted to be a farmer.

His first agricultural job was on a property at Crookston, before moving to Gimmerburn to work for the Paterson family and to be a fencing contractor.

Jim Paterson helped him into his first farm – Avalon – at Heriot, when he was 24. . .

Former chair appointed to deer board:

Clive Jermy OMNZ, a well-known red deer stud breeder, has been appointed to the board of Deer Industry New Zealand (DINZ) for a three-year term. He is one of four producer board members, replacing Tim Aitken, Hawkes Bay.

Mr Jermy is a former board chair, standing down in 2007. Before that he was chair of the New Zealand Deer Farmers’ Association.

NZDFA selection and appointments panel chair David Stevens said the panel had interviewed three skilled and talented candidates and the decision process was extremely challenging. The unsuccessful candidates were Tim Aitken, who stood for re-election and Otago-based businessman and deer farmer Grant Cochrane. . .

 


Penalising efficiency

June 8, 2014

Federate Farmers President Bruce Wills:

. . .  The Green’s Gareth Hughes was using a verbal concealer since their plan to ditch the world’s most stringent Emissions Trading Scheme for a carbon tax wasn’t mentioned.

Not mentioning the tax to a farming audience. Was he too scared to do that or did he know he couldn’t answer the questions that would follow?

With Labour scratching the immigration sore ahead of the general election, the Greens are seemingly hitting their farming button. This may reflect the pressure they’re facing from the Mana-Internet hookup. Stranger bedfellows I have never seen but it is hellishly clever branding. Just as the word Green provides a cuddly cloak, covering up less than cuddly policies, the Mana-Internet Party is even more left wing but in the smart dress down clothes of a programmer.

All will be fine until Internet Party’s leader and spin doctor are publicly put on the spot with a highly technical question, like the relative merits of Dual stack, 6rd, DS light, 4RD, MAP-T, MAP-E. That’s when the cynical branding will be revealed for what it is.

And what is it? Not so much a marriage of convenience as a temporary odd coupling for electoral advantage in the hope the funder, Kim Dotcom will be able to escape extradition.

Meanwhile, the Greens’ rhetoric around agriculture maintains the illusion that agriculture is not in the ETS when we most definitely are.

From fuel to electricity to the famous number eight wire, all farming inputs are covered by the current ETS. While surrender obligations for farm biological emissions have been deferred, what Victoria University’s Professor Martin Manning told the Science Media Centre should be noted: “Agricultural emissions increased over 2009 – 2012 due to more export of dairy products. However, the longer term trend shows our CO2 emissions are increasing by more than those of methane and nitrous oxide from agriculture . . . substantial reductions in CO2 emissions are more important than changes in the other greenhouse gases.”

While biological emissions account for half of our emissions, that “more export” means we send offshore some 90 per cent of the food we produce.

There’s no free lunch because any carbon tax price would likely find its way into the retail price of milk among other staples. The targeting of farming also denies the reality that New Zealand agriculture has been cutting emissions in each unit of agricultural output by 1.3 per cent each year.

We’re also world leaders in agricultural greenhouse gas research. This makes a strange combination of the Greens’ view of farming as both fall-guy and cash cow.

Penalising our farmers for being the world’s most carbon efficient will not only reduce production and jobs but push production offshore to more carbon heavy farmers. Now where’s the global or local benefit in that?

While the Greens say sheep and beef biological emissions will be initially excluded, that’s an all-too obvious sweetener. In a carbon tax, sheep and beef farmers would still pay what they are paying now under the ETS and making them pay later for biological emissions is as simple as turning the regulatory knob.

Yet the reference to the cost of this economy of drought will stick in the craw of farmers who have been stung by Green Party opposition to rainwater storage. That includes the sheep and beef sector who are looking to water storage to reduce climate risk and improve business and farming models.

The differential tax treatment for biological emissions they propose may reflect that the Greens are starting to understand our farming system is world-leading in low carbon protein production. It is a pity they’re not yet ready to admit it.

 

The policy appears to be predicated on the stupid premise we must do our bit even though we are doing what we can through research and efficient production.

Our emissions are a tiny portion of the world’s. Adding costs and/or reducing production here will encourage our far less efficient competitors to increase it.

That would result in both environmental and economic losses.

 

 

 


Carbon tax conundrum

June 6, 2014

Trans Tasman explains the implications of the Green Party carbon tax policy and the conundrum it poses for Labour:

. . . Dairy farmers who are currently exempt from the ETS will pay a reduced rate of $12.50 a tonne for their pollution. Beef and sheep farmers will be exempt. A BERL economic report released with the policy indicates the average dairy farmer would take a 12.5% hit to their income, and should the milk price fall to around $7kg M/S, about 10% of dairy farmers would be vulnerable. Implementation of the policy would hinge on post-election backing from Labour, which appears at best lukewarm – David Cunliffe is already distancing himself from the policy saying it is Green policy to be negotiated after the election. NZ First leader Winston Peters says he does not support a carbon tax. So it leaves confusion in voters’ minds whether a carbon tax would be a goer.

A policy with such serious implications as this isn’t one that ought to be left to post-election negotiations.

Whether or not Labour would countenance the tax could well influence voters – but maybe that’s why Cunliffe won’t make a stand.

What Peters says he supports and what he would actually support, given the chance, aren’t necessarily the same thing.

But it does confirm the Greens, in placing such a high priority on climate change protection (even though NZ is only responsible for 0.14% of global emissions), want to drive fossil fuel producers out of business, and halt the expansion of dairying. And if Labour has to cosy up closer to the Greens to ensure it looks like a Govt-in-waiting, how will this play out in electorates like the West Coast (where mining is a core industry) or New Plymouth where Andrew Little, with leadership ambitions, will be trying to show he can win a seat? . . .

A party trying to gain only a relatively small proportion of the party vote can afford policies which impact badly on certain areas.

Those trying to win electorates too are much more aware of the negative impact policies which might be attractive in theory have on real people in practice in real life.

 

 

 


What does Labour think?

June 3, 2014

On the face of it a tax to discourage something that isn’t wanted is okay.

It works for tobacco.

Perhaps that’s why the Taxpayers’ Union uncharacteristically is welcoming a new tax.

. . . “For us the key questions are whether the Green Party’s policy will result in a simpler, more transparent tax system and whether it will reduce New Zealand’s overall tax burden. From what we’ve seen to date, it appears the proposals could do both.” . . .

The Green part doesn’t want to reduce the overall tax burden.

It wants to add a capital gains tax without any compensating reduction in other taxes and it’s planning other taxes including charges on water.

But the most important question about this policy is what does Labour think?

. . . For the policy to be implemented it would have to be accepted by the Labour Party as part of a coalition deal, and there would have to be a change of government.

Labour isn’t commenting – which usually means it doesn’t agree with what the Greens want.

The tax would impose higher costs on households than any compensatory reduction in other taxes and that would hit the poorest people hardest.

A carbon tax was one of the big factors which sank Julia Gillard’s Labor government in Australia, Labour here will take that into account before it decides whether or not to support the policy here.

 


More tax, higher costs, fewer jobs

June 2, 2014

The Green Party plans to impose a carbon tax on us:

. . . Co-leader Russel Norman wants to scrap the current carbon pricing system – the Emissions Trading Scheme.

In its place would be a tax of $25 per tonne of carbon on industry polluters. . .

Critics of the tax claim the tax is a burden on households, who pay higher electricity and fuel costs.

However, the Greens say their levy would be offset by a ”climate tax cut” on the first $2000 of income. 

”We can reduce our emissions without hurting household budgets,” he said. ”Households will be on average $319 better off every year under the Green party policy.” . .

Imposing a tax with one hand and giving a tax with another won’t make anyone better off because the tax will lead to other cost increases on fuel, power and food which will passed on, in part or full, to consumers.

Agriculture – which is currently exempt from the ETS – would pay a reduced rate of $12.50 per tonne. This works out as an 12.5 per cent hit on farmers’ income. This includes 2 per cent on the working expenses of the average farm. A Berl Economics report, released with the policy, said dairying will be ”adversely affected.”

Dairying won’t just be adversely affected by the carbon tax, it will be hit by other Green policies too.

But it adds: ”However, at the currently projected pay-out for milk solids, even dairy farms in the lowest decile would remain well above break even in the face of an emissions levy.”

What happens when the payout drops to its long-term average which is well below the $7 forecast for the coming season?

What about the environmental impact of less efficient farmers in other countries increasing production because our produce is more expensive which makes it easier to compete with us?

And what about the poor people who will face higher prices for dairy products, power and fuel?

Other gas-emitting industries – such as electricity and road fuels – are less likely to be affected because they would be able to ”pass-on any production cost increases to households.” . . .

That will be the households whose earners will be getting a tax cut, the benefit of which will be less than the cost increases from the extra tax.

BusinessNZ Chief Executive Phil O’Reilly said the levy may threaten jobs. 

“Our approach should be unlocking business solutions rather taxing business more,” he said. 

As a “small open trading economy” New Zealand should participate in international emissions trading schemes.

Federated Farmers president Bruce Wills said the tax will make dairy farmers “less competitive” in international markets. . .

Less competitive means lower returns which means less export income which means less economic growth which means we’ll be less able to fund the first world education, health and other services we need.

However green they want to paint it, this is a red policy which will add costs, put downwards pressure on wages and threaten jobs.

Bernard Hickey told last week’s  Alliance Group Pure South conference that the election will be close.

He then went on to list the policies that farmers could expect to adversely affect them under a Labour/Green coalition with whichever other left-wing parties they’d need to govern.

They included: capital gains tax, compulsory KiwiSaver and water restrictions and charges.

Those are three very good reasons to vote National and the Green carbon tax is another.

And Steven Joyce points out some inconvenient truths:

 

 

 


Ag entry to ETS postponed to 2015

July 3, 2012

Changes to the ETS announced by the government are designed to maintain incentives for emission reductions, without loading large extra costs onto households, employers and exporters.

“Today’s decisions are a reflection of the balanced and responsible approach this Government has taken to reducing greenhouse gas emissions.  They offer Kiwi exporters, employers and households certainty in a challenging and changing world economy,” Climate Change Issues Minister Tim Groser says. . .

“We have considered in-depth the recommendations of the ETS Review Panel, listened to what those affected by the ETS are saying, and reviewed what our trading partners are doing.  We also considered feedback through community consultation, including written submissions, a series of regional meetings, and hui.

“The National-led Government remains committed to doing its part to reduce greenhouse gas emissions, but it is worth noting that we are the only country outside Europe with a comprehensive ETS.  In these times of uncertainty, the Government has opted not to pile further costs on to households and the productive sector.

“The Government remains an active and engaged participant in the on-going discussions focused on global agreements, and the changes announced today offer us useful flexibility to adapt in the future, while still demonstrating our commitment to doing our fair share,” says Mr Groser.

Not surprisingly the left reckon this is disastrous.

However, Business NZ says the government has taken a reasonably balanced approach to carbon pricing in its amendments.

The protections – companies having to surrender carbon units for only half the carbon they emit, and a cap of $25 per tonne in the price of emissions –recognise the fact that New Zealand is ahead of most of the world in accepting a price on carbon.

BusinessNZ Chief Executive Phil O’Reilly says the changes will maintain incentives for emissions reduction while shoring up New Zealand companies’ ability to compete against companies in other countries.

“The move recognises the financial constraints not only on businesses but also on consumers.  It guards against increases in the price of electricity and fuel that would otherwise occur because of an unequal international playing field.

“This is not a softening of the ETS.  The changes announced today will not reduce the costs currently faced by New Zealand business and consumers.

“We should remember that the current cost of carbon, although relatively low, is still more than is being faced by our trade competitors, and will doubtless increase as the global economy recovers.

“While these amendments do not make the environment harder for business, neither do they make it easier.  Moreover the frequent reviewing of the scheme’s design also loads uncertainty costs onto New Zealand business.

 Federated Farmers says the changes, which include delaying the entry of agriculture into the scheme, are one step towards reality:

The New Zealand Emissions Trading scheme (ETS) has taken a big step towards forward, yet remains the harshest treatment of any agricultural production system on earth.

“The Government realises even tougher measures would hurt not just agriculture but the wider economy,” says Dr William Rolleston, Federated Farmers Vice-President and climate change spokesperson.

“Both our Chief Executive, Conor English, at the Rio+20 Earth Summit  and our President, Bruce Wills, at the World Farmers Organisation, got the same message; targeting primary food production in ETS-type policies is anathema to sustainable primary food production.

“In a world preoccupied with the survival of their economies and with food security, there is no point in trying to lead where others will not follow.

“Yes biological emissions account for some 47 percent of New Zealand’s emissions profile.  They also represent 68.1 percent of our merchandise exports and indeed, 100 percent of the food we eat. 

“New Zealand is able to not only feed itself, but produces enough food to feed populations equivalent of Sri Lanka. 

“This is why it is positive the Government has listened to Federated Farmers and will keep agricultural biological emissions out of the ETS until at least 2015. 

“We have retained the one-for-two surrender obligation we asked for, along with the $25 fixed price option. Federated Farmers also wanted offsetting for pre-1990 forests and opposed the reduction of pre-1990 forest allocations. The Government has listened to that too, but those who do offset will be penalised. 

“We are pleased the Government has chosen not to further complicate matters by imposing additional restrictions on the importation of overseas emissions units.

“Despite what some Opposition parties are likely to say following these changes, our ETS remains the harshest on any agricultural production system, anywhere in the world. 

“Unlike other countries where agriculture is given special treatment, farmers here, just like every other business and family, pay the ETS on the fuel and energy we use.  This not only impacts a farm’s bottom line, but the cost of turning what we produce into finished goods for export.   

“Australia’s new Carbon Tax is really aimed at Australia’s 300 largest companies.  Meanwhile, Australian farmers are being financially rewarded for boosting soil carbon levels on-farm. 

“Since 1 January, all agricultural processors in New Zealand have been filing emission returns accounting for agricultural biological emissions.  We are still counting emissions no other government is contemplating, including our cousins across the Tasman.

“While agriculture emissions here grew 9.4 percent between 1990 and 2010, the dollar value these generated for NZ Inc exploded almost five-fold.  Our sector’s emission growth needs to be put into context alongside a 59 percent increase in electricity emissions and 60 percent for transport.

“What’s more former Labour Cabinet Minister, the Hon David Caygill, found emissions in every single unit of agricultural product have fallen some 1.3 percent each year, for the past 20 years. 

“We do not need an ETS to improve our productivity.  Global competition has done that for us. 

“That New Zealand’s farmers are among the world’s most carbon efficient, is an inconvenient truth New Zealanders are not hearing from Opposition politicians. 

“We can do more but that will be through productivity gains and research leadership exemplified by the Global Research Alliance on Agricultural Greenhouse Gases.

“In a world of increasing food deficit, our hope is for Opposition parties to realise being a carbon efficient food exporter is global leadership,” Dr Rolleston concluded.

The Kyoto Protocol was the triumph of politics and bureaucracy over science and negotiations have yet to reach agreement on its successor.

There is nothing to be gained for the environment and a lot to be lost from the economy if agriculture is forced into the scheme when none of our competitors faces similar costs.


Agriculture excluded from Australian carbon tax

July 12, 2011

Australia’s decision to exempt agriculture from its carbon tax has political implications for farmers here.

National has consistently said the Emissions Trading Scheme won’t be imposed on agriculture until our competitors face a similar regime.

Labour’s policy is to force agriculture into the ETS in 2013.

National  understands there’s no environmental gain to imposing an ETS on farming until there are scientifically proven methods farmers can use to reduce emissions. It also understands the economy would suffer if our competitors didn’t face similar costs.

Labour just wants to tax farmers more – the impact on the environment and economy are irrelevant to them.

The difference is clear and every farmer should take that into account when voting.


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