Reality appears to be about to shatter Jacinda Ardern’s dream that New Zealand could lead the world in showing how to deal with farm emissions.
The Government is facing a breakdown in negotiations over its much-vaunted He Waka Eke Noa deal with farmers to price greenhouse gas emissions and now looks likely to have to admit defeat.
The consequence is likely to be that the Government will now have to impose a new fertiliser levy on all farmers without their agreement.
In effect, it would be a tax.
The levy was first proposed by the Greens in their 2020 Manifesto and would be a big political win for them.
But it would impact unevenly among farmers — hitting dairy farmers much harder than their sheep and beef colleagues.
And its imposition would end Jacinda Ardern’s promise to the United Nations that the Government-farmer agreement would show the world what was possible on climate change mitigation.
Ardern was one of Waka Eke Noa’s biggest boosters.
As recently as last October, she insisted it would be in place by the end of the year, ready to come into effect in 2025.
That presupposed the legislation to implement it would be passed by this Parliament.
But the Government and farmers have been unable to agree on the finer details, and it now looks unlikely that Ardern’s deadline can be met.
So, Ministers are looking for an alternative.
And that now looks likely to be a fertiliser levy on nitrogenous fertilisers like Urea.
The chair of Beef and LambNZ, Kate Acland, revealed the Government’s plans on “The Country” last week.
She said the time had run out to get He Waka Eke Noa legislated before the election.
“I’m aware various options are being floated alongside He Waka Eke Noa,” she said.
“There are rumours of a fertiliser levy, but clearly, no decisions have been made.”
In a statement to POLITIK yesterday, she said there had been nothing concrete.
“But we have had indications from various sources that Ministers are considering a fertiliser tax,” she said.
“Beef and LambNZ would not support this.
“We continue to advocate for a staged implementation of an emissions pricing framework with the deferral of any pricing until we have established a credible, robust centralised measurement system trusted by farmers and other stakeholders, and also until issues such as sequestration, governance, emissions leakage, equity and science-based targets have been resolved and there are viable mitigation options available.”
Sheep and beef farmers were hard hit by the Government’s response to He Waka Eke Noa last October, when much of their tree planting was ruled ineligible to be counted for offset credits against their emissions.
Some modelling suggested that the impact of this could be the loss of 20 per cent of all sheep and beef farms.
Ironically, the Greens proposed a nitrogenous fertiliser tax in their 2020 Manifesto.
They said a two cents per kilo of fertiliser levy would cost the average dairy farm $1515 annually.
However, POLITIK understands that one figure being talked about in Wellington would see the proposed levy go to $150 a tonne of Urea — Ravensdown is currently quoting Urea at around $1000 a tonne.
The Fertiliser Association of NZ estimates that fertiliser makes up about 20 per cent of the running costs on an average dairy farm.
StatsNZ says that New Zealand farmers used 607,000 tonnes of Urea in 2019, so the Government could be in for a $91 million windfall from the levy.
POLITIK understands the Government wants to earmark all the levy income to fund research and technology development to help reduce emissions.
POLITIK could not establish whether the introduction of the fertiliser levy would mean the end of He Waka Eke Noa or whether work would continue to short out its shortcomings after the fertiliser levy was introduced.
The big criticism from farmers of a one-size-fits-all levy is that it will not reward “good” farmers who have invested sums to reduce and offset emissions on their properties.
When the Government unveiled its response to He Waka Eke Noa last October, it was obvious it had been influenced by the Climate Change Commission had doubts about the software that would be used to model each farm’s emissions and the ability to accurately measure vegetation offsets, particularly on sheep and beef farms.
What could complicate the process further is that National is overdue to release its review of He Waka Eke Noa.
Up till now, it has been supportive of the He Waka Eke Noa process, which has been led by the two farmer levy organisations, Beef and LambNZ and Dairy NZ.
But it has not been lost on National MPs that the chair of Beef and LambNZ, Andrew Morrison, lost his seat on the organisation’s board in a recent election when he was beaten by a Southland farmer, Geoffrey Young, a critic of He Waka Eke Noa.
And Federated Farmer’s former President, Andrew Hoggard, who is now standing as an ACT candidate, said last December that the Feds would not continue to support He Waka Eke Noa unless there was a review of the methane targets in the Zero Carbon Act.
Those comments were also noticed within the National caucus.
So, POLITIK understands the party’s policy review will withdraw its support for He Waka Eke Noa and instead propose an alternative.
All this has the potential to embarrass a number of people.
The chair of DairyNZ, Jim van der Poel, though he said the Government got its response “fundamentally wrong”, nevertheless has continued to support its underlying principles; so has the board and executive team from Fonterra.
Ardern conceded that the Government had moved away from the basic He Waka Eke Noa proposal when she launched the Government response on a Wairarapa dairy farm last October.
But the proposal’s biggest booster has been Ardern, who even equipped herself with a pair of new gumboots as she traipsed over dairy farms to meet industry leaders or talk up the proposal.
There are suggestions that she found herself frequently having to mediate arguments over the proposal between Climate Change Minister James Shaw and Agriculture Minister Damien O’Connor and consequently, in the process, became highly knowledgeable about its technical detail.
Prime Minister Chris Hipkins has not had that opportunity.
It was clear that Ardern was attracted to the fact that had He Waka Eke Noa proceeded, it would have been a world first.
“It is a pragmatic solution that helps us meet our targets, be the first in the world to do so and can be implemented quickly,” she said on the Wairarapa farm.
“All of those things are material. If New Zealand is to start making a difference on its agricultural emissions reductions.”
She was even more emphatic about having New Zealand lead the world when she spoke to the United Nations General Assembly in September 2021.
“We are working hard, with a unique agreement between our food sector, government and Māori to reduce agricultural emissions through a pricing mechanism,” she said.
“We are determined to show the world what is possible.”
It was always ambitious, but it may be that the pursuit by the Climate Change Commission and then the Government of the perfect became the enemy of the practical in He Waka Eke Noa.