Comment: Dr Jacqueline Rowarth says New Zealanders need to accept that what is being proposed in greenhouse gas reduction will have a negative effect on the economy and their lifestyles.
"... in a manner that does not threaten food production".
These words from the Paris Agreement on climate change are being lost in all the various calculations, targets and policies forming the debate around greenhouse gas emissions and New Zealand's response.
Federated Farmers of New Zealand has tried to remind people of this point. Other farming leaders have explained that many New Zealand farmers are already at best practice, which means that anything they do to try and reduce greenhouse gas emissions will reduce food production.
Various other arguments have appeared, including that other countries will produce the food required but create more greenhouse gas in doing so, and that taxing greenhouse gas will increase food prices to consumers.
It has also been suggested that other countries will follow New Zealand's lead and bring agriculture into their emissions schemes. Similar words were stated when New Zealand removed agricultural subsidies, and no other country has followed suit.
Farmers could bear the costs
Unless other countries start a greenhouse gas tax on food production, the likelihood of food prices increasing is slim – because production will be cheaper in dollars in other countries… but not in greenhouse gas, other environmental impacts and, perhaps animal and human welfare.
In the face of global competition, the costs of the New Zealand greenhouse gas decision will be passed to New Zealand farmers.
It is difficult to explain this to people not connected with farming because many have been influenced by ongoing statements from activists implying farmers have become rich on the back of resource exploitation.
"Rich" might be true in assets (never forgetting bank debt), but in terms of income, the story is not one of riches. Agricultural household incomes, referred to in budgets as "drawings', are lower (depending on payout and schedules) than New Zealand's average household income ($105,719) even after housing ($17,000).
When fully in the New Zealand Emissions Trading Scheme, the average dairy farmer could be paying $36,000 (calculated on current data). This means that half the drawings, the household income, will have gone without adding any value to the business or lifestyle of the family.
This potential reduction is already having an impact.
Sales at National Field Days did not involve many big-ticket items; farms aren't selling, rural shops are reporting a very quiet winter, unemployment in manufacturing and retail has increased, and the banks have indicated that the economy is slumping.
New Zealand appears to be entering a spiral that will affect the lifestyles of everybody – urban as well as country. If agricultural production decreases, the slump will deepen.
High-profile media commentators have stated that "all" the sector has to do to reduce greenhouse gases but make more money is follow the example of Landcorp Farming (now Pāmu Farms of New Zealand) and Owl Farm (St Peter's School/Lincoln University demonstration dairy farm in Waikato). But simple comments overlook important factors.
For Pāmu, actual data has yet to emerge. Certainly, there have been statements about destocking and reducing nitrogen use, but despite the economies of scale that state-owned enterprises can achieve, a return to shareholders has mostly been absent over the past few years.
For Owl Farm, data for environment and economics has been produced. During her tenure as demonstration manager, Louise Cook has overseen an 8 per cent reduction in emissions (from the 2015-16 season), while lifting operating profit by 14 per cent.
Owl Farm now produces 12.2 tCO2e/ha (tonnes of CO2 equivalent per hectare), which is about average for a low-input farm in Waikato. Profit is also average.
Average means that many farmers are already doing better, and efficient farmers have few gains that they can make without decreasing production.
Starting point important
Starting point is extremely important when holding up examples. So is an understanding of the complexities of a biological system. New Zealanders need to accept that what is being proposed in greenhouse gas reduction will have a negative effect on the economy and their lifestyles.
Phil Journeaux, AgFirst Waikato agricultural economist, has calculated that the cumulative effect of achieving Carbon Neutral NZ will mean forgoing between $700 billion and $1.5 trillion in GDP if growth is reduced to 1.9 per cent or 1.5 per cent GDP in comparison with BAU (business as usual) of 2.2 per cent.
Households will be better off than they are now, but worse off than they would have been in the BAU (business as usual) scenario. This deserves far greater discussion than has yet occurred.
New Zealanders also need to take into account that in the global calculation, anything that New Zealand does will have little effect.
At less than 0.2 per cent contribution to the global emissions, and with agriculture at less than half of that, it is important to remember that New Zealand provides animal protein for 40 million other people – which is 0.5 per cent of the world's population. And it produces that protein from land that is mostly unsuitable for anything except pasture.
This doesn't mean we shouldn't take action, but any action we take should be with our eyes open, the facts considered, and the implications accepted.
- Dr Jacqueline Rowarth CNZM CRSNZ HFNZIAHS has a PhD in Soil Science and has been analysing agri-environment interaction for several decades.