Emissions trading - will cost our primary producers
Released 13 Aug 2010
Dr Tessa Mills, Federated Farmers policy advisor
The Emissions trading scheme or ETS, as it has become commonly known, is talked about throughout New Zealand. The level of interest is increasing as more people realise that they will be impacted upon and goods such as fuel and electricity will increase.
For farmers the proposed cost increases of farm inputs is nothing new and a cost that they, along with the rest of the community will shoulder. These input costs will burden all parts of the community however costs can be minimised if the use of these items is reduced.
These increased input costs were actioned in July 2010 with half of the increase on diesel and electricity being implemented between 2010 and 2012. The remaining increase will be actioned in 2013 will see yet more costs increases in the future.
New Zealand agriculture is due to enter the ETS in 2015 with the currently proposed point of obligation being at the processor level. That means that on every animal killed or every kilogram of milksolids produced, an ETS component will be paid. The amount paid is dependent on a number of factors, one of which is the going rate for carbon. At present it is valued at $25 tonne but if this value increases so do costs for farmers at the point their farm product is processed.
The difficultly farmers have with the proposed point of obligation is that for farmers who, through various on farm management practices, have increased their production efficiency relative to emissions do not realise any advantage with regard to costs. The system as proposed does nothing to encourage improved emissions efficiency.
Federated Farmers have argued hard for agriculture to be exempt from New Zealand's ETS. Our farmers, especially meat producers, are already struggling under poor returns. To add another cost to the marginal profits that meat producers currently earn will undermine the economics of these systems and may push production offshore. This is damaging for New Zealand's economy and does nothing to reduce global carbon emissions as less efficient producers fill the market gap.
To discuss this or any other issues, please call 0800 FARMING (327 646)
