Submission

Submission on the ‘Deferral of NZ ETS Reporting Obligations For Animals – Farmer Activities’ Discussion Document 

Federated Farmers did not support the Government’s pricing agricultural emissions proposal as outlined in the October 2022 Ministry for the Environment and Ministry for Primary Industries 2022 Pricing Agricultural Emissions: Consultation Document (the Consultation Document).

Federated Farmers did not support changes made to the Government’s pricing agricultural emissions proposal announced by media release on 21 December 2022.

Federated Farmers does not support either option outlined in the August 2023 ‘Deferral of NZ ETS Reporting Obligations For Animals – Farmer Activities’  Discussion Document (the discussion document). 

Federated Farmers only supports the pricing of agricultural emissions (biogenic methane and nitrous oxide) in New Zealand if such an agricultural emissions pricing mechanism is based on: 

• A scientific target for methane, based on no additional warming (that is being zero carbon equivalent) by 2050;
• Exclusively incentivising viable and cost-effective mitigation options that are available to New Zealand farmers; and
• No emissions leakage or reductions in food production occur. 

The above “Federated Farmers agricultural emissions pricing principles” align closely with the He Waka Eke Noa Primary Sector Climate Change Commitment July 2019 foundation document that was agreed to by Government and which states: 

“The sector will work with government to design a pricing mechanism where any price is part of a broader framework to support on-farm practice change, set at the margin and only to the extent necessary to incentivise the uptake of economically viable opportunities that contribute to lower global emissions. The primary sector’s proposed 5-year programme of action is aimed at ensuring farmers and growers are equipped with the knowledge and tools they need to deliver emissions reductions while maintaining profitability”

Federated Farmers has returned to the founding principles upon which the He Waka Eke Noa partnership was based. After being involved for over two years, the Government ultimately disregarded these sound principles. What started as a proposal by industry to develop a marginal pricing mechanism to lower global agricultural emissions has ended up as a proposal by Government to tax all agricultural emissions, with no price discovery mechanism, no marginal pricing and significant emissions leakage. The logic of marginal pricing is sound and the Climate Change Commission also advised in favour of a marginal pricing system in its May 2022 report ‘Advice on Agricultural Assistance.