Climate Change Minister, James Shaw; Prime Minister, Jacinda Ardern and Agriculture Minister, Damien O'Connor brief Wairarapa dairy farmers on the Government's response to He Waka Eke Noa in October.

The Government yesterday pulled back on part of its response to farmers over the proposal to impose a levy on-farm greenhouse gas emissions.

But it may be too late.

The original response in October divided farming and has led to the powerful lobby group Federated Farmers walking out of the He Waka Eke Noa partnership, which was negotiating with the Government over the proposal.

But yesterday though the Feds’ president, Andrew Hoggard, welcomed yesterday’s moves, he still holds substantial criticisms of the proposal.

What is interesting about his stance is that he has supported the whole process since it was inaugureted in 2019 and really only made his opposition known after the Government issued its response.

That response adopted the view of the Climate Change Commission, which said that except for riparian planting (mainly on dairy farms), it would be too difficult o take account of other planting on farms and thus, farmers could get no credit for the carbon sequestration the planting enabled.

Modelling by the Ministry for Primary Industries indicated revenue on some sheep and beef farms could drop by as much as 20 per cent as a consequence because their venegation was not generally riparian planting.

Yesterday’s announcement would appear to open the door for the inclusion of blocks of bush on sheep and beef farms to be included to earn a credi6t and thus reduce the levy payments for those farms.

Yesterday, however, that position was partly reversed.

In a joint statement, Prime Minister Jacinda Ardern, Agriculture Minister Damien O’Connor and Climate Change Minister James Shaw confirmed the next steps in the Government’s partnership with the primary sector to develop a strategy for on-farm carbon sequestration.

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“The recognition of on-farm sequestration will be a core component of the Government’s work to reduce New Zealand’s agricultural climate emissions,” they said.

“We want a plan for reducing agricultural emissions we can all agree on. We’ve heard sequestration is a top priority for farmers and critical to making He Waka Eke Noa work,” Ardern said.

“The Government has already committed to sequestration being recognised and compensated for from 2025.

“The He Waka Eke Noa partnership, the Climate Change Commission, and the Government all agree that it needs to be done in a way that is fair, cost-effective, and scientifically robust.

“The recent consultation process has highlighted how important the issue of sequestration is to farmers.

“This is work we already had underway, but the next step will be to work closely with farmers to develop the scientific and policy approaches needed to best recognise sequestration that occurs on farms.

 “The industry has asked for a plan that covers all forms of scientifically robust sequestration possible on-farm, and we support that. There is more work to do, much of it technical, but today we affirm that this will be undertaken in close partnership with the sector,” O’Connor said.

“The sector partnership recommended that the Emissions Trading Scheme be improved and updated to allow more vegetation categories to be included, and that vegetation types eligible under He Waka Eke Noa could be transitioned into the NZ ETS as it is expanded and improved.

“This builds on the Government’s commitment to establish native forests at scale to develop long-term carbon sinks and improve biodiversity,” Damien O’Connor said.

“What we are proposing represents a significant shift in the way the Emissions Trading Scheme works,” said Shaw. 

“It means farmers will get full recognition for scientifically proven sequestration on their farms.

“This should unlock a wave of research, science and innovation into forms of emissions removal that also enhance biodiversity and other important values that aren’t always achieved through exotic forestry plantations. 

“Bringing new categories into the ETS may take some time, so there will also be a need to ensure transitional arrangements from 2025. 

“In-line with the Primary Sector Partnership’s original proposal, the Government is committed to sequestration being recognised from 2025,” Shaw said.

The report on agricultural emissions pricing will be published by the end of 2022. A series of policy decisions on He Waka Eke Noa will be made in early 2023 with the aim to introduce legislation by the middle of the year.

All this was not enough for Federated Farmers.

Their focus has now become the original methane targets which were agreed on a bipartisan basis by National and then-Labour-led Government.

They require a 10 per cent reduction in methane by 2030 and a 24 – 47 per cent reduction by 2050.

Federated Farmers President Andrew Hoggard yesterday said the change in Government position looked like positive news, but the details would be important.

“The single biggest flaw with the Government’s rejection of He Waka Eke Noa’s (NWEN) proposal remains the methane targets and the provisions that the price will be set to meet these targets at any cost, with socio-economic impacts being ‘secondary,” he said.

“If the Government want to claim that it is modifying and not rejecting HWEN, this needs to be the next change made.”

Hoggard is unlikely to get a change in the targets partly because the 10 per cent target is in the legislation, and the 2050 target can be reviewed in the future by the Climate Change Commission anyway.

He is also beginning o look increasingly out of step with the mainstream of the dairy industry.

Fonterra yesterday announced a plan to work with Nestles to develop a commercially viable net zero carbon emissions dairy farm with emissions targets that are much tougher than those that Hoggard objects to in the zero carbon legislation.

Over the five-year project, the farm, run with co-partner Dairy Trust Taranaki, will examine all aspects of farm operations to reduce carbon with the aim of cutting emissions by 30% by mid-2027 and a ten-year ambition of reaching net zero carbon emissions.

The demonstration farm at the centre of the project is a 290-hectare property surrounding Fonterra’s Whareroa site.

It would seem the farming industry is now diverging between farmers comfortable with the direction Fonterra (and the Government) are heading and a rump who are not.