An independent economic analysis by rural consultancy BakerAg firm has found the capital costs of meeting the proposed changes would be $185,000 for a mixed cropping farm and $680,000 for a hill country sheep and beef farm. In addition, there would be ongoing compliance costs of between $35,000 and $80,000 per year.
The research also estimates a loss of net future income of between $95,000 and $184,000 per farm as a result of ‘grandparenting’ provisions, which lock in sheep and beef farms at their current stocking rates and land-use, and impractical fencing requirements.
Using a similar farm type to that profiled by the Ministry for the Environment (MfE) in their Interim Regulatory Impact Statement – a rolling hill country sheep and beef farm - the analysis concludes the total capital, operational and loss of future income costs for a rolling hill country sheep and beef farm at between $2.4 million and $3.4 million over a decade, many times greater than the $148,500 over 10 years estimated by MfE. This difference is due to BakerAg using more accurate modelling for things like fencing costs, the need for water reticulation when stock are no longer able to access waterways, and other additional resulting costs such as weed management in setback areas.
Depending on the type of farm, these annual compliance costs would represent between 5.4 per cent to 30 per cent of a farm’s earnings before interest, tax, rent, and manager’s salary.
In its submission to the government on the essential freshwater policy proposals, B+LNZ is recommending the following changes:
- Removing the grandparenting and fencing provisions and adopting an industry approach, including the existing New Zealand Farm Assurance Programme (NZFAP), to support sheep and beef farmers to improve freshwater quality.
- Allow hill country cropping as a permitted activity with careful management of soil type and discharge.
- Amend land-use change restrictions, particularly the moratorium on forestry to pastoral conversion, and allow extensive farming systems to diversify into other extensive or low environmental impact systems.
- Use of tailored land and environment plans to manage stock access to waterbodies or exclusion in hill country.
- A focus on the identification and management of critical water source areas and proper stock management.
Andrew Morrison, chairman of Beef + Lamb New Zealand, said the government can make changes to the freshwater proposals and still achieve the environmental outcomes it is seeking.
“This analysis shows the actual costs to meet these proposed regulations are far greater than what has been estimated and exceed what the sheep and beef sector needs to do to manage our particular risks.
“In their current form, the freshwater proposals will penalise low emitters and adversely affect sheep and beef farmers more than any other sector.
“The grandparenting rewarding existing use provisions will lock in a farm at their current discharge levels, including at current stocking rates and land-use. They will prevent low nitrogen-discharging farms from changing their system even by a little bit, to carry out improvements to address their specific issues such as sediment and phosphorous.
“The way the current policies are written would also require sheep and beef farmers to fence nearly all of their farms. For those New Zealanders that haven’t been on a sheep and beef farm, this would mean fencing off thousands of kilometers of waterways with little environmental benefit.”
Flexibility and the ability to adapt and innovate has been an integral part of the resilience of the sector to date, said Mr Morrison.
“We are committed to find solutions that work for everyone and we have a track record of being constructive and pragmatic in the development of robust policies.
“New Zealand’s sheep and beef farmers aren’t just part of our rural communities – the sector is also New Zealand’s largest manufacturing sector and second largest goods exporter, supporting 81,000 jobs both directly and indirectly.
“This is why it’s so important to get policy settings like those proposed for freshwater right so we can achieve meaningful environmental improvements while preserving the social, cultural, and economic wellbeing of our farmers, rural communities and in fact all New Zealanders.
“With these changes, we can reach an outcome that will both improve New Zealand’s freshwater ecosystems while also enabling us to have vibrant and thriving rural communities.”
The full BakerAg economic impact analysis is on B+LNZ’s website, along with B+LNZ’s submission on the government’s freshwater proposals at: https://beeflambnz.com/freshwaterconsultation
For more information, please contact Sam Halstead on 027 474 6065.