Opinion: One simple solution to farm emissions controversy

Prime Minister Jacinda Ardern with James Shaw (left), Damien O'Connor and Kieran McAnulty, during their stand-up at Kaiwaiwai Dairies Ltd near Featherston. Photo / Mark Mitchell

Opinion

OPINION:

The reaction to the Government's proposal for charging agriculture's greenhouse gas emissions has been loud and emphatic. Among many issues, commentators have highlighted the impact on sheep and beef income and reduced food production in New Zealand being replaced by higher emitting overseas production.

The fact is, to achieve the required 10 per cent reduction in methane emissions by 2030 requires, in the absence of mitigations, 10 per cent less fodder to be consumed by livestock. That's the incontrovertible way officials go about counting the nation's emissions reduction. In our predominantly grass-fed farming systems, a 10 per cent reduction in fodder consumed requires a large number of farms to be sold for other land uses.

The plan as proposed is to screw up the price of emissions until sufficient farmers are forced out of business to achieve the required reduction. Not only would that add gold nuggets to the current goldrush of carbon forestry but, perversely, some forced sales will be to other farmers having greater equity, resulting in no reduction in emissions. This proposal is far more pernicious than income tax, as at least with tax, no income means no tax. It will reduce farm values and equity, and some mortgages will be impaired.

So much for identifying the problems, but what are the solutions?

The most obvious is the hybrid option that the He Waka Eke Noa partnership put out for consultation. Maybe it could do with a little tweaking, but it avoids this wholesale charging of emissions and instead incentivises the uptake of mitigations such as genetic improvement, methane inhibitors and vaccines once they are developed and approved. This is consistent with how the 10 per cent reduction by 2030 target was set in legislation. It was thought achievable through the combination of new technology and the ongoing change from pastoral to other land uses. There was no thought of having to force farmers to the wall with a punitive emissions tax.

Curiously, Government's own modelling indicates that the 10 per cent methane target is projected to be met by 2030 through farm-to-forestry conversion without implementing any of these proposals. Is this a solution looking for a problem?

The Cabinet paper supporting the proposal is deficient in its analysis of its statutory responsibilities.

It refers to the emission reduction target as a mandatory requirement. It does not mention that there is scope, albeit limited, to amend the emission reduction target. Importantly, as a matter of law interpretation, the meaning of these requirements must be "ascertained in light of the purpose" of the legislation. The only relevant purpose is acknowledgement by the Crown under the Paris Agreement of "the fundamental priority of safeguarding food security and ending hunger". Food production in NZ contributes to these goals and should be seen as a good rather than a harm. However, where emission reductions are possible and do not reduce food production, then farmers have a responsibility to take action.

Most pastoral farming is on land unsuitable for horticulture so there is limited opportunity to avoid methane emissions by swapping to horticulture, which by the way, generally has much greater nitrous oxide emissions.

The solution is in technology to develop viable mitigations, not polluter-pays charging of all emissions. If this proposal goes ahead, NZ consumers will discover they will also pay through higher food prices, reduced employment opportunities and higher costs of imported consumer goods resulting from hits on the balance of payments and the strength of the NZ dollar.

Most pastoral farming is on land unsuitable for horticulture. Photo / Supplied

All we need is a price signal that selectively incentivises the adoption of mitigations without threatening the viability of farming.

Sure, incentive payments in a hybrid model will require a levy collected by processors to pay for them, but that levy would be much less than the price Government is proposing. It could be best done on a feebate system in that those who uptake the mitigations are funded by those who are able to but chose not to do so.

There are other substantial benefits of the hybrid option over the proposed farm-level option. The administrative burden is only a fraction, as the farm-level option requires detailed recording throughout the year of livestock tallies, weights, production of meat, milk, wool and velvet, together with tallies and weights of all sales and purchases, births and deaths. All this needs to be audited, most of which cannot be supported by independent and verifiable evidence. The incentive to evade these charges is large, and the chance of apprehending the evaders is small.

Money and effort would be much better spent on developing the mitigation technology than another bureaucracy funded by farmers.

• Graham Pinnell is a retired Cambridge farmer and has served on two Crown regulatory boards.