An open letter by 100 signatories claims a quarter of New Zealand’s sheep, beef and deer farmers will be driven out of business by He Waka Eke Noa greenhouse gas reduction proposals, Elaine Fisher writes.
Primary sector climate action partnership He Waka Eke Noa’s proposed framework to reduce agricultural greenhouse gas emissions could drive one-in-four sheep, beef and deer farms out of business, while benefiting the dairy sector, one of 100 signatories to an open letter, Waka Adrift, released in August claims.
“We have had great support to our letter and now we have raised the issues, we are working to put forward solutions,” Rick Burke says. He farms sheep, beef and dairy grazers in the foothills of the Kaimai Ranges and says it’s not too late for He Waka to make changes.
“The Government will announce its final decision in July next year but before that there will be a submission process. We would rather get changes ahead of submissions and work together to land something which will incentivise all farmers to go faster to reduce emissions, improve biodiversity and water quality.
“The current pricing arrangements do the exact opposite. There is no incentive for low-environmental impact sheep, beef and deer farmers to invest further in future proofing their farms. Many will be crippled by being disproportionately priced for their emissions when in fact many farms, since 1990, have stabilised or reduced their emissions. This needs to be recognised in the pricing framework. Farmers feel bewildered and helpless which is why we are standing up for them.”
The letter Rick co-signed is from “a group of concerned sheep and beef farmers” who claim DairyNZ and Fonterra submitted “in support of a 10% biogenic methane target, knowing full well that it would be sheep, beef and deer farmers paying the ultimate price – the destruction of their sector”.
The letter asked why neither the ETS or He Waka price biogenic methane as a short-lived gas and why they have used the GWP100 (Global Warming Potential 100) formula to assess warming as opposed to the more recent GWP* (Global Warming Potential*) formula as pricing mechanism for agriculture.
“The group believes New Zealand, as an agricultural nation, could have been a world leader if He Waka had taken this approach, and looked through the GWP* lens at a sector level, to identify who was doing the warming.
“This would have provided a totally different insight into how methane should be priced. They also believe B+LNZ and the Meat Industry Association made a mistake not enforcing He Waka take this approach,” Rick says.
Dairy Exporter asked for responses to the letter’s main points from He Waka Eke Noa, Federated Farmers, Beef + Lamb, DairyNZ and Fonterra. All responded, some in more detail than can be accommodated in this article.
B+LNZ chief executive Sam McIvor said the figures referenced in the open letter are based on an incorrect representation of B+LNZ modelling.
“The modelling shows what could happen at a methane price of 35c/kg in 2030. B+LNZ released this modelling to reinforce our advice in the He Waka proposal for a cautious approach to pricing.
“We pushed for a number of provisions including a maximum starting price for methane of 11c/kg that would be held for three years, targeted levy relief and a recommendations report that clearly stated a price of 35c/kg of methane would have significant implications for sheep and beef farmers.
“If B+LNZ and its partners fail to convince the Government that the He Waka alternative is credible, the sector will pay the price of being included in the ETS, as the legislation is already in place.
“We would lose the split gas methane target, effectively facing a net zero target for methane, and the methane price would be linked to the soaring carbon price.
“B+LNZ is also urging the Government to review the unfairly high methane reduction targets in legislation; currently a 10% reduction by 2030 and a reduction of between 24-47% by 2050.
“The target for carbon dioxide is net zero (or no additional warming) by 2050. Based on the latest science, an equivalent target for methane to contribute no additional warming would be a 10% reduction by 2050.
“Our strong position is that the Government should report annually on warming as well as emissions and to ensure the legislated review of these targets in 2024 uses the latest science – that means using appropriate metrics such as GWP*.”
Fonterra general manager of global climate policy Andrew Kempson said the co-op supported He Waka’s recommended approach as an alternative to pricing agricultural emissions through the Emissions Trading Scheme.
“Our submission on the Zero-Carbon Act (2019) included our support of a 10% methane reduction target by 2030 alongside proposing this target be subject to reviews in line with the development of the first three emissions budgets.
“We continue to support this, however we disagree with the claims that this was made ‘knowing full well that it would be sheep, beef and deer farmers paying the ultimate price – the destruction of their sector’.”
DairyNZ chair Jim van der Poel said He Waka is a credible solution with cross-sector support, which can continue to make improvements over time. The He Waka system has built-in incentives to reduce emissions, will recognise planting onfarm, and any money generated will be recycled back into the sector.
“In 2019, our sector won a hard-fought science-based decision with Government for a split gas approach in the Climate Change Response Amendment Act 2019, recognising biogenic methane only needs to reduce and stabilise, not go to net-zero like long-lived gases. That was a massive breakthrough, and we continue to build on that.
“DairyNZ’s support of the 10% biogenic methane target was on the basis it would be reviewed in 2024 and 2029. That is still the expectation. DairyNZ and B+LNZ are calling on the Government to give farmers a fairer deal by using the latest and best science when setting methane targets. We believe both the 2030 and 2050 methane targets need to be reviewed – and they will be in 2024 and 2029.”
He Waka Eke Noa programme office director Kelly Forster said He Waka partners and the recommendations report acknowledged that there needs to be careful balancing of the levy settings to ensure New Zealand farmers and growers remain productive, profitable and competitive.
“Pricing on weight and setting the price in relation to trajectory toward targets, among other factors, reflects the fact that methane is a short-lived gas and in line with GWP* science.
“We modelled a range of prices, and at the highest methane prices, it did show significant impacts on sheep, beef and deer farmers and their viability.
“However, it is important to note the prices modelled are not the prices that are recommended under He Waka. The reason the modelling was included was to show the impact at higher prices in 2030 and demonstrate those prices do not align with the He Waka objectives and should not be used. All partners agree the consequences of some of the higher prices modelled are unacceptable for the sector.
“He Waka pricing does align with the science of GWP*. He Waka’s pricing recommendations are that methane is priced to the extent necessary to see it reduced and stabilised.
“GWP* is useful for informing targets at the national and agriculture sector level. Farmers do not have 20 years of historical data for a set parcel of land – it is therefore not practically possible to use a GWP* approach to calculate emissions/warming at the individual farm level.
“However, we are interested in exploring how we could incorporate GWP*, or a warming approach, at the farm level in the future.”
Federated Farmers national president Andrew Hoggard said the He Waka price shouldn’t be higher than what is modelled. “In theory it could be lower than the modelled price, but my concern would be that the committee could find it all too hard and just default to those prices. So, it’s a scenario to be rightly concerned by.
“Fonterra and DairyNZ did submit on those numbers. I was involved in those discussions and argued against them, but I’m not sure their reasons were as Machiavellian as suggested, (in the open letter). In my view it was a flawed attempt at appeasing Government on the 2030 target and hoping for a concession on the 2050 target which never happened.
“Federated Farmers stuck with what we felt were solid scientific principles around what would cause no additional warming and that was 3% by 2030 and 10% by 2050.
“GWP* is a high-level way of showing the warming impact of methane more accurately than GWP100. But if you try to use it at a farm level it will create issues of grandparenting and locking people into current land use.
“So, my view is let’s leave it as a high-level principle for the targets, but at the farm level the focus should be on getting each farm more efficient, so farming better and not less.
“The challenge will be finding a baseline on how we compare farms that is acceptable across farmers. It should be a baseline that compares sheep farmers with sheep farmers and dairy farmers with dairy farmers. Basically, that’s why we ended up with a flat levy in He Waka as the marginal pricing challenge couldn’t be agreed on.”
Andrew was in India attending the International Dairy Federation World Dairy Summit when approached for comments on the open latter.
“The Indians talked about how they want to produce 43% of world milk, up from their current 23%. They have a GHG footprint per kg of milk that is 10 times NZ’s footprint.
“If they don’t improve it as they grow, one has to question whether any of what we do in NZ matters a damn thing with regards to global warming,” Andrew wrote.
