Andrew Hoggard, President, Federated Farmers

Forget the tractors and the angry groundswell signs; the real battle between farmers and the Government kicked off yesterday when farmers got the formal proposal to price methane and nitrous oxide emissions from their farms.

The stakes, both political and economic, are huge.

That much was clear yesterday in the immediate reaction of Federated Farmers who even though they have been involved in developing the proposal offered it only a guarded welcome.

Farmers have been offered two schemes to consider; one which would price the methane according to a complex calculation based on the Farm Environmental Plan of how much methane their farm emitted. The other is a more straightforward levy on milk and meat delivered to processors.

Federated Farmers President Andrew Hoggard said  yesterday that neither proposal was suitable in the long term.

The arguments are complex and technical but essentially Hoggard is concerned that individual farmers may not get credit for efforts they make on their farms to reduce methane.

“My preference would be for a system that allows for not only the ability for farmers to not to have to pay anymore if they hit targets, but potentially if they go further and reduce methane more than required then it should in effect act like a credit, as those farmers would be offsetting warming created by long lived gases; the same as planting a tree,” he said.

The proposals were drawn up by the Waka Eke Noa Steering Group consisting of representatives from the the Ministry for the Environment; the Ministry for Primary Industries; Federation of Maori Authorities; Dairy NZ; Beef and Lamb NZ; Horticulture NZ; meat and dairy companies and Federaetd Farmers.

Hoggard said Federated Farmers had  pushed for options that could have achieved a scheme to rebate farmers for hitting targets  “but they didn’t make the final cut you see in the draft document.”

Federated Farmers is in a difficult position. Though it has been part of He Waka Eke Noa from the beginning it now faces a threat from the Groundswell organisaiton who are challenging their leadership at the grass roots.

Groundswell founder, Bryce McKenzie,  told “Rural Roundup” host Andy Thompson this week that Federated Farmers was out of touch.

“I don’t think they’re actually in contact with the farming, and I don’t think they are actually reading what’s going on and farming,” he said.

“I don’t think they’re listening to what’s going on at grassroots level.”

McKenzie claimed that farmer organisations were “divided up” over He Waka Eke Noa and said they needed to be united and on the same page.

The steering group are planning 25 farmer meetings in February to gauge farmer opinion though farmers will not be asked to vote on the proposals.

The group is required to report back to the Government in April with a recommendation on which option farmers want.

“It’s hugely important farmers get involved and tell us what they think in February,” said Dairy NZ chair, Jim van der Poel.

“We’re committed to finding a solution that works for farmers and keeps the sector in control of where and how it uses funds for the benefit of farmers.”

That is a veiled reference to the threat that hangs over farmers over the methane issue.

If they cannot agree on an alternative solution then the Government can simply put them into the Emissions Trading Scheme

The proposal being sent to farmers estimates that the ETS could cost a Waikato dairyfarmer .$21 452 per year by 2030 and $51,4 72 for an intensive Canterbury dairy farm. Hill country sheepfarmers might pay around $20,000.

the farmgate levy would dramatically drop these costs to $6195 for a Waikato dairy farm; $12,966 for a Canterbury dairy farm and around $7000 for a Norht Island hill country sheepfarm.

The processor levy proposal would see similar costs.

But the final pricing has not yet been agreed on and it is possible this is an area where the proposal could fall over.

Hoggard said the rpcies in the document were palceholders.

“At this stage we do not know what the expected price of methane will be,” he said.

The ebst system would be one like the one used by the Reserve Bank to set interest rates, he said.

“Though it seems the committee would be making recommendations to the Climate Change Minister, so nowhere near the independence of the Reserve Bank,” hes aid.

“The concern with this approach would be that it would be backward looking, not responsive to changes in the market, and thus we could have a price that overshoots or undershoots.

“To have a system that is more market based would likely require more admin and a bit more complexity.”

Hoggard yesterday wrote to Climate Change Minister James Shaw saying that the Feds continued to oppose the 2030 methane reduction targets.

“Federated Farmers is increasingly concerned that the He Waka Eke Noa pricing mechanism may be chosen on the basis that the current 10% by 2030 biogenic methane reduction target must be met without regard to social, economic, and environmental consequences ,” he said.

The only way individual farmers can reduce their biogenic methane emissions from livestock is to reduce the amount of feed or forage they provide to their livestock, he said.

“We do not therefore support such an approach.

“We have never supported, and do not support, a pricing mechanism that achieves legislated targets at any cost.”

There would seem little doubt that the Groundswell protests have put pressure on Federated Farmers to take a harder line on the He Waka Eke Noa proposals.

But how far they will take their opposition is debatable.

The proposals have the backing of two key industry bodies, DairyNZ and Beef and LambNZ; that plus the threat of being placed in the ETS if they don’t agree on the a proposal will be pwoperful incentives for farmers, and Federated Farmers, to eventually support one or other of the proposals.

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