Detailed analysis of Government’s agricultural emissions pricing proposal reveals significant flaws and impacts as sheep and beef farmers are urged to have their say | Beef + Lamb New Zealand
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Detailed analysis of Government’s agricultural emissions pricing proposal reveals significant flaws and impacts as sheep and beef farmers are urged to have their say

Beef + Lamb New Zealand (B+LNZ) has delivered a damning verdict on the Government’s emissions pricing proposal following a detailed analysis.
Wednesday, 26 October 2022

“Sheep and beef farmers are committed to playing their part to reduce greenhouse gas emissions, however we want to ensure that what we’re asked to do is fair,” says Andrew Morrison, chairman of B+LNZ.

“The Government’s proposal will have a disproportionate impact on sheep and beef farmers, impact the livelihoods of Kiwis in rural communities, increase food prices, cost jobs and ultimately reduce New Zealand’s export income. 

“B+LNZ expressed serious concerns about the Government’s proposal when it was released a fortnight ago, however after a comprehensive evaluation of the scheme and talking with our farmers, we’re now more convinced than ever that this scheme will have a disproportionate impact on the sheep and beef sector and may drive some farmers out of business.

“Make no mistake – the changes the Government has proposed are meaningful and represent a significant departure from the option recommended by the He Waka Eke Noa Primary Sector Climate Action Partnership.”

The proper recognition of sequestration, methane price setting that looks at wider effects and impacts, and delinking of the nitrous oxide price from the Emissions Trading Scheme (ETS) are critical to ensuring sheep and beef farmers are not unfairly penalised, says Mr Morrison.

“It’s critical that we get this right. It makes no sense to put the most carbon efficient producers of red meat out of business. This will not save the planet – in fact, Government modelling shows it will lead to an increase in global agricultural emissions.

“Sheep and beef farmers have every right to be angry at the Government. B+LNZ went into this process in good faith, however in rejecting key aspects of He Waka Eke Noa, the Government has simply not listened to the sector.”

This week, B+LNZ is consulting with and providing sheep and beef farmers with guidance on making a submission to the Government proposal.

“This is a Government proposal, not a B+LNZ proposal,” says Mr Morrison. “It’s critical every farmer takes the opportunity to have their say and tell the Government what they think.”

Sam McIvor, chief executive of B+LNZ, says while the sector recognises everyone has a role in reducing emissions, the sector will not accept a system that disproportionately puts sheep and beef farmers and communities at risk.

“Of course, B+LNZ would prefer farmers didn’t face a price for their emissions, however the Government has legislated that pricing will begin by 2025. The Government has already passed a law to price emissions through the ETS, which would have been disastrous for sheep and beef farmers.

“That’s why B+LNZ has been working hard as part of He Waka Eke Noa, alongside Government, iwi and other primary sector groups, to find a better alternative to agriculture going into the ETS.

“While the Government has agreed that the ETS is not the right place for agriculture it made significant changes to what the agricultural sector proposed through He Waka Eke Noa. Those changes fundamentally alter the balance of the agriculture sector’s proposals and are unacceptable to B+LNZ and our farmers. 

“This is deeply frustrating because the Government was one of the partners working on He Waka Eke Noa from the outset and gave sector partners no indication of these substantial changes.

“While we support the original He Waka Eke Noa recommendation, we do not support the proposals currently being consulted on by the Government.”

“The proposed changes to sequestration are extremely concerning. Sequestration is massively important to many sheep and beef farmers and it’s only fair that farmers paying for emissions are at the same time recognised and rewarded for their trees and other vegetation on their farms absorbing emissions.

“Sequestration was a critical part of the proposed pricing system that provided balance and equity across the sectors, particularly to our extensive farmers who are more likely to have sequestration and less likely to have access to new technologies in the future. The gutting of the sequestration proposal is a major factor in the disproportionate impact on our sector now.

“Given the Government’s own modelling shows how affected our sector will be, we can’t understand why they pulled back on the well-founded recommendations on sequestration.”

B+LNZ also disagrees with other key changes including the emissions price setting process and the linking of the nitrous oxide price to the ETS price. Proposed changes to revenue recycling and incentive payments further undermine the whole programme.  

“The He Waka Eke Noa proposal was designed as a carefully balanced package that achieved equity across all parts of the sector and where price was not the primary driver – the Government has fundamentally undermined this balance,” says Mr McIvor.

“The Government’s own modelling shows that sheep and beef farmers would be unfairly disadvantaged through the Government’s proposal. Their modelling validates our calls for a cautious approach to pricing and shows that much lower prices can achieve the Government’s legislated emissions reductions.”

The Government’s modelling also reinforces the need to adjust the methane targets, he says.

“The higher the target, the higher the price that potentially needs to be applied in order to achieve the target. B+LNZ doesn’t agree with the current legislated targets and is working with other industry groups in parallel to get the targets adjusted. 

“We also have to address the pace and scale of sheep and beef farms being sold into forestry, particularly carbon farms, which is being driven by the carbon price. This effect exacerbates the impact of a price on emissions on our sector.”

ENDS

Note to editors: B+LNZ’s submission guidance can be found on this webpage.

For more information, please contact James Ford on 027 235 9806 or media@beeflambnz.com