The clock is ticking on the plan to keep agriculture out of the emissions trading scheme

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Time is running out towards the end of May, a deadline to finalize a program to exclude agriculture from the Emissions Trading Scheme (ETS), an issue of major interest to Waikato’s vast dairy sector. and other agricultural actors.

Ngahinapouri dairy farmer Jim van der Poel, chairman of agriculture heavyweight DairyNZ, believes the He Waka Eke Noa sector group’s final proposal will ultimately help farmers and others better manage financial risks from emissions . Overall, he said he would also do more to help Aotearoa meet its international emission reduction obligations as the world tackles climate change.

Besides its organization, He Waka Eke Noa involves Beef and Lamb NZ, Dairy Companies Association, Federated Farmers, Foundation for Arable Research, Horticulture NZ, Irrigation NZ, Federation of Maori Authorities, Deer Industry Association, Meat Industry Association and Apiculture NZ.

Emissions related to nitrous oxide (from fertilizers and cattle urine in particular) and methane (from belching cows) are covered by what will be proposed by He Waka Eke Noa. It does not cover farmers’ emissions related to fossil fuels.

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The partnership must make a final recommendation on the treatment of the sector by May 31. Having an individual farm-level levy for their relevant emissions is strongly favored by farmers rather than being exposed to the potential for ever-increasing costs of credits if agriculture is included in the ETS backstop from 2025 .

For the dairy industry, modeling suggests that a farm-level levy could result in additional gross costs for Waikato dairy farmers of US$4,000-5,000 per year initially, up to US$16,000 in by 2050, based on the “average” Waikato farm producing about 100,000 kg of milk solids. annually. However, these costs could be compensated by other actions and incentives.

The boom in dairy farming has led to an increase in nitrogen pollution in some parts of the country.  He Waka Eke Noa's program would seek to induce farmers to change their behavior to reduce nitrous oxide and methane emissions.

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The boom in dairy farming has led to an increase in nitrogen pollution in some parts of the country. He Waka Eke Noa’s program would seek to induce farmers to change their behavior to reduce nitrous oxide and methane emissions.

Whether farm-level preferential pricing should be available from the start in 2025 or after a phase-in period involving a levy on agricultural processing companies is among the final details being worked out. .

Van der Poel said the types of gross costs modeled are not something for dairy farmers to worry about, especially if they can be offset.

“Our intention is to ensure that we meet our commitments to reduce our footprint…and at the same time to ensure that farmers maintain viable businesses.”

While there is 86% support from farmers nationwide for farm-level pricing, a significant portion (40%) agrees to make it happen after a processor-level system.

“Introduce a levy on processors [initially] would be simpler,” van der Poel said.

However, moving immediately to a farm-level system in 2025, van der Poel said: “We are working hard to see if this is a possibility.

“The preference would be to not have to set something up and then have to transition.”

The dairy industry is a key industry in Waikato and DairyNZ chairman Jim van der Poel said local farmers want a farm-level pricing system to account for their nitrous oxide emissions and methane.

Andy Jackson / Stuff

The dairy industry is a key industry in Waikato and DairyNZ chairman Jim van der Poel said local farmers want a farm-level pricing system to account for their nitrous oxide emissions and methane.

Waikato farmers supported the idea at the farm level, he said, because they wanted to be responsible for their own emissions and individually recognized for reducing emissions.

According to He Waka Eke Noa’s plans, the levies would be controlled by a governance structure – involving government, industry and Maori – and recycled to fund research and development on ways to improve agriculture and to encourage farmers to change practices.

Van der Poel said He Waka Eke Noa’s ideas would mean farmers would not have to pay more than under the ETS in the early years of the program. But, in the longer term, costs under the ETS would increase and more emissions from farmers would be captured.

“The cost to farmers in the ETS will increase significantly over time, while in the He Waka Eke Noa [scheme]it shouldn’t happen,” he said.

Additionally, involving farmers and reducing their emissions could help Aotearoa agriculture maintain its position as a world leader in low emissions and help create premiums for produce.

“If we can continue to position ourselves as the premium product and get a premium in the market that more than offsets the cost to farmers, that would be a good outcome.”

Once a final recommendation has been made, the government will consult with the Climate Change Commission and then the public and make a decision by December.

Whatever happens, it will mean a new way of operating for farmers and van der Poel says there will certainly be educational services available.

“Our intention, of course, is to ensure that farmers will be better off in the long run, not worse off.”

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