Submission

Submission by Federated Farmers of New Zealand on the Pricing Agricultural Emissions Consultation Document 

Federated Farmers does 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 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:

1. A scientific target for methane, based on no additional warming (that is being zero carbon equivalent) by 2050;   
   The best available science places this level of reduction at 10% by 2050 based on an average reduction of 0.3% per year from 2017 to 2050.[1] Federated Farmers has consistently opposed the current 10% by 2030 and 24-47% by 2050 biogenic methane reduction targets since they were first legislated for in the 2019 Climate Change Response (Zero Carbon) Amendment Bill.[2])
2. Exclusively incentivising viable and cost-effective mitigation options that are available to New Zealand farmers; and
3. No emissions leakage or reductions in food production occur. 

For clarity throughout this submission these three conditions are referred to as “Federated Farmers agricultural emissions pricing principles”

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

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”[3]

Federated Farmers has returned to the founding principles upon which the HWEN 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 (CCC) also advised in favour of a marginal pricing system in its May 2022 report ‘Advice on Agricultural Assistance.[4]

Federated Farmers recommends that in the interest of consistency the New Zealand Government either be clear to the international community that it does not place value on food security, or that the Government make it clear domestically that food security is an issue of high importance when designing an emissions pricing system. It is our strong preference that the latter approach be taken.  

In our 2019 submission on the Climate Change Response (Zero Carbon) Amendment Bill Federated Farmers supported the establishment of the CCC as an independent source of climate advice. We are very concerned by the Government’s repeated undermining of the political independence of this important institution. The Government demanding that the CCC regularly provide recommendations on, what will be a very contentious, price on agricultural emissions will likely further erode the political independence of the CCC.