Opinion: Dairy could be hit with trifecta of taxes

Dairy farmers have been operating in a climate of uncertainty with no indication of when they would be faced with a charge for agricultural emissions. Photo/File

Green Party and Labour Party policymakers want to hit dairy farmers with a trifecta of environmental taxes that could cost an average of $18,000 per year for each farm, and for those farmers that draw water for irrigation the cost would be in excess of $63,000 per year.

But unlike winning the trifecta at the horse races, there's nothing for New Zealand's dairy farmers to celebrate. Our economists calculate that the proposed carbon tax would add an average of $6850 to each farm's costs, the nitrogen pollution tax would add $11,232 per farm - and then there's Labour's proposed water use tax which would add a further $45,000 average for farms irrigating.

Of New Zealand's 12,000 dairy herds, 2000 use irrigation.

DairyNZ chief executive Dr Tim Mackle. Photo/File

The tax trifecta would severely reduce dairy farm profitability, and possibly require additional borrowing for some farmers to meet expenditure. It would impact the success of our rural economy, and put at stake the livelihood of our rural communities.

If a political party were to ask me what the dairy sector wants from Government, I would say an economy-wide plan outlining the emission reduction expectations for each sector over the longer term.

Targeting farmers this severely and swiftly does little to incentivise mitigation, and ignores the hard work farmers have been voluntarily doing themselves to lessen emissions.

Dairy farmers have been operating in a climate of uncertainty with no indication of when they would be faced with a charge for agricultural emissions. Despite this, we have put the Dairy Action for Climate Change plan in place so that all farmers now know what they can be doing right now to reduce their carbon emissions.

Greens leader James Shaw welcomed the climate change plan when it was announced in June.

He's well aware of the work currently under way. However, what might be a surprise to him is that we support the concept of a climate commission, and the idea of clear carbon budgets so the dairy sector can plan for the future.

Photo/File

The Dairy Action for Climate Change plan is in partnership with Fonterra, and has the support of the Ministry for the Environment and the Ministry of Primary Industries.

It dovetails with the work of the Biological Emissions Reference Group (BERG), a joint sector and Government reference group. BERG's purpose is to build robust and agreed evidence on what farmers - that's dairy, beef, sheep and deer - and the horticultural sector can do to reduce emissions, and to assess the costs and opportunities of doing so. BERG's final report is due later on this year, and will be vital in informing future policy development on agricultural emissions.

New Zealand is acknowledged as a world-leader for efficiently producing milk on a greenhouse gas per unit of milk basis, as reported by the United Nation's Food and Agriculture Organisation.

And we're committed to doing even better, but it must be understood by everyone, including the Government of the day, that climate change is too complicated for each sector to attempt to address on its own.

Rather than strongly taxing dairy, we want strong Government direction to get all sectors - rural and urban - to work together through an economy-wide plan to reduce New Zealand's greenhouse gas emissions over the longer term.

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