ETS a step on road to hell: farmers

Bringing agriculture into the emissions trading scheme would be a case of the road to economic hell being paved with good intentions, Federated Farmers president Don Nicolson told MPs reviewing the scheme.

The select committee heard submissions from agriculture sector submitters yesterday. They were largely variations on this theme:

Climate change is not the only challenge the world faces. Feeding a growing global population is essential too. New Zealand's pastoral farming model produces food efficiently, with a low carbon hoof-print (or emissions per kilogram of meat or milk solids), so it would be an environmental own goal to discourage production here. It would only increase production, with higher emissions, somewhere else.

No other country is planning to impose a carbon price on its farmers. Australia is thinking about it but won't decide until 2013 - if its scheme ever gets out of the Senate. Denmark did but quickly changed its mind.

At this stage there is nothing New Zealand farmers could do in response to a price on emissions except produce less or pay what would amount to a tax.

But submitters differed in the conclusions they drew from this common analysis.

Federated Farmers argued the ETS should be scrapped. It would only deepen an already severe recession, Mr Nicolson said. Better alternatives would be for the Government to lease land and pay people to plant trees on it, or introduce a low carbon tax, or even walk away from the country's commitment under the Kyoto Protocol altogether, like the Canadians.

If the ETS does proceed, agricultural methane and nitrous oxide emissions should not be included in the ETS until New Zealand's major trading partners and competitors act to reduce such emissions and there are mitigation measures that are economically sustainable for farmers to implement, Federated Farmers submitted.

Fonterra, by contrast, does not call for scrapping the scheme or for exempting agriculture from it. Chief executive Andrew Ferrier called instead for an intensity-based approach, instead of the current absolute cap which from 2013 would make farmers liable for any increase in emissions above 90 per cent of 2005 levels.

An intensity approach would set a benchmark of best practice in terms of emissions per unit produced, say per kilogram of milk solids, and only impose a financial cost on farmers to the extent they fall short of that level. Such an approach would not penalise them so long as they remained the most efficient around or deter them from increasing production.

"This is what New Zealand is best at. Other countries subsidise their agriculture. We are potentially doing the reverse," Mr Ferrier said.

Putting unnecessary pressure on the dairy industry's profitability would leave it less able and willing to invest in the research needed to reduce agricultural emissions, he said.

Mark Leslie, chairman of the Pastoral Greenhouse Gas Research Consortium, briefed the select committee on progress scientists are making on various approaches to reducing agricultural emissions - through selective breeding, changes to the composition of pasture and mapping the genomics of key micro-organisms in the stomach of farm animals, among other things.

But while New Zealand remained at the forefront of such research internationally and progress had been made, commercially viable solutions were uncertain and at best years away.