What's not said on carbon tax

There is little farmers can do to cut methane emissions from cows.

The Greens' proposed carbon tax policy could have dire consequences for New Zealand's dairy industry, endangering the competitiveness of our production and pricing ourselves out of the market, writes Chris Lewis.

The recent announcement of the Green's carbon tax policy was not so much a shock but a wake-up call to the reality of how vulnerable we are to the values and the whim of our Government.

A carbon tax for New Zealand would mean we would no longer be a competitor in global dairy trade, which means less in subsidies, fewer jobs, and more than likely a government back in deficit. Farmers are environmentalists too and have more in common with the Greens than one might think. For one their policy on stopping the urban sprawl is a policy we, at the Federation, share.

I think some of the Green's policies are quite good, such as the lowest corporate tax rate, managing our productive land in a ecological and sustainable way, and ensuring our rural communities are sustainable by developing essential infrastructure and making sure we have access to fundamental services. But the devil is in the details, and what we might agree on in the broadest of theories can see us very much divided on the definitions.

New Zealand is already a very low emissions exporter of dairy products and is investing in research constantly to further reduce its impact. A recent Food and Agriculture Organisation (FAO) study in 2010 estimated that globally emissions averaged 2.4kg of C02 equivalent (CO2e) a kilogram of milk, when New Zealand's emissions are estimated at around 1kg of C02e per kilogram of milk, according to DairyNZ, and Fonterra's carbon footprint results were 940g per litre of milk. So it seems detrimental to me, when things are in a positive downward trend of approximately 1.14 per cent reduction in C02 a year, to take away the carrot and introduce the stick.

Not only is it counterproductive to the investment in research but it is counterproductive to our production, therefore our trade and economy.

The effects of placing a tax on dairy farmer's emissions, at $12.5 a tonne, would look like around a $17,000 dent in costs for the average farm. What they don't address is the potential to price ourselves out of the market and shift production to far less carbon efficient countries. These costs cannot be passed on to global consumers before they are a global greenhouse gas cost -- rather they will hurt the competitiveness of our production.

As I said, we are environmentalists too. Farmers are taking measures in reducing their carbon footprint through feedstock, manure control, stocking intensities, and riparian planting, but unfortunately there is little farmers can do to cut methane emissions from cows. It'd be great if the people behind this policy could identify and use these measures and work with the Ministry for Primary Industries and the farmers it will ultimately cost.

As Peter Drucker said: "The most important thing in communication is hearing what isn't said." Ultimately, ill-thought-out and anti-competitive policies like this are going to close our borders to the primary industries, so I hope they have a back up plan.

New Zealand dairy is an efficient producer and is focused on becoming even more so, investing in Pastoral Greenhouse Gas Research Consortium, the world's most comprehensive research programme for livestock emissions mitigation, since 2003. We have an achievable target from this and other research that will give farm systems a 30 per cent lower carbon footprint, while not shooting ourselves in the foot.

We need to be aware of not just ourselves but the wider implications of policies such as these. We don't live in a bubble, so although the idea of returning New Zealand to its pre-industrial state sounds nice, we still survive off feeding people beyond our borders. I am not saying we have it nailed but we are doing well in the agricultural emissions space, globally better than most, so why not build off what is working?