Prime Minister Jacinda Ardern, Agriculture Minister Damien O'Connor, and Climate Change Minister James Shaw are making an announcement in the Wairarapa on the Government's plan to reduce agricultural emissions.
Video / Mark Mitchell
The Climate Change Minister says National is "confused" in its criticism of the Government's farming emissions plan, with modelling showing its impacts on farmers could be lower than a plan designed by the industry itself.
National Party leader Christopher Luxon has come out swinging at the Government's proposal to price agricultural emissions from 2025, claiming one-fifth of sheep and beef farms will be "decimated".
He says the Government should have stuck with an industry-developed plan, however, an expert says the impacts on sheep and beef farms are likely to be similar in each.
Luxon told Newstalk ZB the Government proposal was an "absolute shocker, completely unacceptable".
Luxon pointed to modelling in the plan that showed by 2030 net revenue for sheep and beef farms could reduce by between 18 and 24 per cent, based on different prices for methane.
"The Government's proposal for agricultural emissions pricing is directly based on the modelling and the system put forward by the sector partnership He Waka Eke Noa.
"When Mr Luxon comes out swinging in response to the Government's proposals and says we should go back to what the sector was proposing, he should be upfront about what he is actually calling for."
On Tuesday the Government unveiled its world-first plan to price agricultural emissions from 2025.
It is designed to ensure they decline by 10 per cent by 2030, and 24-47 per cent by 2050.
The plan, which is out for consultation, was largely based on a proposal put forth by an industry partnership He Waka Eke Noa, with differences on who sets the pollution price and approaches to sequestration or offsetting through things like on-farm vegetation.
National Party leader Christopher Luxon. Photo / Mike Scott
Luxon's comments echoed those of lobby group Federated Farmers president Andrew Hoggard who said the Government plan would "rip the guts out of rural New Zealand". He too cited a "20 per cent reduction" in sheep and beef farming.
Both Federated Farmers and National were unable to provide the Herald data within the industry plan He Waka Eke Noa that would allow a direct comparison to show how the impacts would differ.
Modelling displayed within the He Waka Eke Noa impact and cost-benefit analysis report showed impacts on sheep and beef profits could range from 2 per cent to over 44 per cent, based on different methane prices and prices for carbon emissions.
Lobby group Beef and Lamb, which is part of He Waka Eke Noa, did its own modelling believing the "average farms" calculated in the industry report did not show the "significant distributional impacts across the different farm classes".
They found in one scenario not allowing for sequestration 77 per cent of farms would see before-tax profit fall at least 10 per cent and a quarter at least 30 per cent.
Even allowing for sequestration just over half would see reductions in before-tax profit of at least 10 per cent and 15 per cent reductions of at least 30 per cent.
Shaw said the Government ran its own numbers and found that the agricultural emissions targets were achievable at a lower price point than that modelled by the sector.
"Meaning the Government's proposal will in fact have less of an impact on sheep and beef farmers than the partnership's would."
A spokeswoman for He Waka Eke Noa said it was "quite complicated to compare the findings" as they were "based on different assumptions".
Programme director Kelly Forster said modelling was always a "simplification of reality and requires assumptions to be made, so modelling outputs are only ever indicative".
All modelling however, pointed to a higher impact on sheep, beef and deer farmers, she said.
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
New Zealand Institute of Economic Research principal economist Bill Kaye-Blake, who advised on the Government's proposal, said while the Government and industry plans used different variables they showed relatively similar impacts.
He said that ultimately reducing methane emissions and pricing methane was always going to impact sheep and beef farms more greatly as they made less money per hectare.
"If sheep farming isn't very valuable per tonne of carbon emitted, then we have to do less of it.
"If you put a levy on them the sector is going to get smaller. There is no way around that.
"You've got 50 per cent of greenhouse gases are coming from agriculture, those need to be reduced. This is the impact of doing that."
A higher price for carbon emissions in the Emissions Trading Scheme could also see more marginal farming land going into forestry.
One of the key concerns from farmers was that the Government plan rejected greater inclusion of on-farm planting in offsetting emissions, including riparian planting.
Kaye-Blake said it was "hard to see that would make a big difference".
"The reason that those plantings aren't being included is because they're small.
"If you took a big chunk of your farm and you put it into a forest, that would go into the ETS, and you'd get credit for it.
"But smaller plantings are harder to manage and account for but then they're going to have a small impact on sequestration."
Kaye-Blake said whichever option was chosen would be "hard".
