A major new report from the Productivity Commission is an example of New Zealand's "myopic" view on tackling global warming, says Federated Farmers.

Vice-president Andrew Hoggard said while there were positive aspects to the commission's final report on how the country can shift to a low-emissions economy, it showed how fixated New Zealand is on its own emissions and how it isn't thinking globally.

DairyNZ said emission prices suggested by the commission would see the average dairy farmer in 2050 facing an annual emissions bill of more than $230,000.

The suggested price would have a significant impact on the agriculture sector if it had to face the full price without a technology solution to reduce methane, said chief executive Tim Mackle.


The commission's findings were largely in line with those in its draft report in April, but with some stronger calls. It said New Zealand needed to quickly stop burning fossil fuels, plant vast amounts of forest and switch to electric vehicles and greener agriculture.

It called for emissions standards for newly-registered vehicles, a "feebate" scheme to boost EV uptake and putting a price on gases from farms.

The commission recommended moving away from fossil fuels for providing process heat for industry and a "rapid and comprehensive" switch from petrol cars to EVs, of which fewer than 10,000 are on our roads today.

It called for a diversified agriculture sector, with more land used for cropping and horticulture, and a ramping up of land planted in forests of between 1.3 million and 2.8m hectares, mostly converted from marginally profitable beef and sheep operations.

Hoggard said on the positive side, the commission recognised long-lived gases had to be reduced to zero, while methane should be treated differently.

"But it takes a myopic view ... just looking at New Zealand on its own, forgetting it's global warming, not New Zealand warming and not taking into account that our pastoral production systems generate among the lowest food footprint in the world. So it makes no sense to be slashing pastoral production when other countries, which do it a hell of a lot less efficiently than us, are increasing theirs."

Promotion of mass tree planting on farms was a big concern for sheep and beef farmers, particularly hill country operators, Hoggard said.

"They get really worried about that. What happens to the whole rural community if farms are in trees? "


Many farmers were keen to plant permanent forest sinks on marginal pieces of their land but access was needed to them. The complexity of the carbon credits system also was not helpful, he said.

"One of the good things New Zealand could do (to contribute to global emission reduction) would be show our farming systems and the things we do well, share that around the world. It could have quite a big impact on reducing methane from pastoral production elsewhere," said Hoggard.

A priority for farmers, which the commission didn't address, was deciding what was the appropriate level of methane emission, he said.

"There's a hell of a big debate (still) about methane and what it needs to be. When we've got that we can decide the most sensible way to achieve that outcome."

DairyNZ said the report suggested that over the next 30 years the emissions price should rise to at least $75 per tonne of carbon dioxide equivalent, and possibly to more than $200/tonne.

"We can't expect the average dairy farmer in 2050 to face a yearly emissions cost in the vicinity of $231,800," said Mackle.

"Emissions prices need to incentivise best environmental practices. But at these prices, without a split gas approach or the availability of methane-reducing technology, we would be unfairly penalising New Zealand farmers," he said.

No decision had been made on agriculture moving into the ETS but a transition period for the sector was essential for any low emissions path the Government decided to take, he said.