New challenges raining down on farmers

The recent rain has been as welcome as a cold beer at the end of a very hot day.

If we didn’t get those precious millimetres when we did, and prices had dropped, then morale would also have taken a hammering.   Farmers have enough coming down the tunnel at them without worry about parched paddocks and crops.

First up is the prospect of agriculture being included in the Emissions Trading Scheme.   The extra imposition would likely be collected at the processing plants. That’s at 5% of emissions initially, so for my farm about $2000 for 7000 stock units.  One wrinkle is that I am a breeding farm so most of my animals are sold to finishers to “finish off” for markets. 

How is the (methane-equivalent) carbon tax on these going to be accounted for? Remember it will work on a per head cost at the meat works.  Both the finisher and I will be responsible for the emissions but will the breeder be the one who pays?  Then there will be the opportunity to “opt in” if you plan to change land use. Not really sure how this is going to work. It might be switching to vegetables, fruit or grains. But these all have an emissions profile as well, from the use of fertiliser. 

Maybe it is a switch to forestry but although trees can sequest carbon, there can be significant environment downsides at harvest stage, not to mention effects on local economies with a switch to land use where the pay-off is many years down the track. 

I am all for innovative policy ideas but the one thing any business – and in fact any person – wants, is certainly. Making up complex trading schemes to change land use doesn’t deliver certainty. Surely, they have learnt from the challenges around the current ETS in forestry. 

The next pitfall for farmers is interim limits. This government is not satisfied with the current National Policy Statement on Water, the requirement for ‘swim-able’ standard by 2030 and limits by 2025. They want things done faster. Well, it can be but the cost is horrendous and to be able to afford to pay it, you need to stay in business.   All of these things undermine farm profitability. 

Good luck in Auckland if you think your interceptor drain is going to solve the ‘poo on the beaches’ nightmare.  It might sort out the central city but not the West or North Shore. Welcome to the world of endless cheques to pay for the clean-up.
Thirdly is the drive for more trees.   Many farmers are planning to plant more - but where it makes sense both environmentally and financially and for the working of the farm when harvest comes around. 

What does the Government do?  It promotes a scheme that disadvantages landowners if they plant trees. This is the afforestation grant scheme (AGS), and my advice is don’t join it.  If you want to plant trees then find a way to fund it yourself. This is because although the fund pays to plant the trees the Government takes the carbon for the first 10 years - around 300 tonnes per hectare. 

The problem with the AGS is that this is the “risk free carbon” meaning that you can sell this carbon and not have to pay any back when you harvest. At $20 a tonne you have just lost $6000. So it’s a no-brainer not to join this scheme.

When the Government doesn’t hit its target of a billion trees, it will have two choices: Incentivise farmers to plant or force them to plant. Unfortunately, successive governments have followed the force approach; hopefully this one will be different. 

My advice for MPs looking for a workable scheme is to disregard the advice from bureaucrats  in Wellington and come and talk to people from the land. That’s where the innovation is, and how you’ll get the job done.
Jamie Falloon - Provincial President, Federated Farmers Wairarapa