By Guy Trafford
In comparison to the vehicle fleets of other OECD members, New Zealand has one of the oldest with an average age of over 14 years. However, when looking for fuel economy this is not such a bad thing as the newer ‘light’ vehicles tend to be bigger, heavier, have larger engines and consume more fuel.
Despite the benefits of an older fleet, New Zealand’s transport emissions have increased dramatically in recent years. Over the period from 1990 to 2017 overall gross greenhouse gas (GHG) emissions have increased by 19%. Over the same period agricultures increased by 13%. However, in the last reporting year (2016-17) agriculture actually fell, be it by only 0.1%. When we look at energy which encompasses transport, over the 1990- 2017 period it has increased by 38.2%. Transport in isolation increased a massive 93.4%, and in the last reporting period transport increased by 6.3% an slight increase on the 5.5% per year average over the 17 year period.(MFE summary).
When we look at New Zealand’s agricultural systems, i.e. Primary Industries, New Zealand’s primary sector contributes one fifth of our GDP, generates 1 in 10 jobs and produces 75% of our merchandise exports. At the same time the pastoral livestock systems are considered to be the most efficient in regard to GHG emissions per product produced in the world.
So given the above wouldn’t you think if you were looking for ‘low hanging fruit’ to reduce emissions you would go straight to the transport sector? It would also be the easiest sector to regulate as all vehicles are licensed (or should be) and operate in a regulated environment i.e. confined to roads and have speed limits governed etc. Some of us remember the impact of the oil spike of the 1970s, and with a precarious economy the rapid response of government to limit the damage. Carless days were brought in and speed limits lowered. The effectiveness of these measures can be argued. However, they did have the effect of bringing everybody to the table. At the moment we have a situation where seemingly a large sector of society is preoccupied pointing their collective finger at agriculture and determined not to look at their own behaviour. Sadly, the government seems to be complicit in fostering this attitude.
Dairy farming in particular has been on the receiving end with calls for changes to land use. Those who are calling for this are really showing a poor understanding of economics and rational behaviour. Firstly, if the land-use options existed why wouldn’t farmers have adopted them before now? For those already financially committed to dairying, to change land use is similar to asking a city dweller to take a reduction in their weekly salary and in the meantime add another hefty slice onto an already high mortgage. In the meantime they will likely see the value of their home drop.
Government could regulate a land-use change but it wouldn’t happen without a large dose of government support, i.e. taxpayers money, accompanied by overseas earning falling. Agriculture is well aware that there is a problem with the amount of GHG coming from livestock and is prepared to make sacrifices to try and help remedy the situation in an environment that has very few tools in the box. It would be useful for both the morale of farmers, and to bring wider society to the table, if the responsibility of reducing emissions was more widely spread and more rested where it should be.
In the meantime, another Global Dairy Trade action has come and gone and thankfully this time around there's nothing to complain about. Overall prices have risen by 2.7% with the key Whole Milk Powder lifting by 3.6%. Somewhat surprisingly, Skim Milk Powder also rose by 3.8%. Surprising, because Dairy Farmers of America had indicated they were putting a lot in the auction. China featured strongly despite the issues they are having which augers well for the new season. Both ASB and Westpac have stuck with their predictions for the new season of $7.00 and $6.90 respectively, and believe how well next season goes will largely be dependent on spring production levels as cow numbers are static or falling, climate is going to be the making of any lifts (or falls) in production.
As expected, the Overseas Investment Office has approved the Yili purchase of Westland Dairy Co-op. At $3.41 a share Westland dairy farmers will welcome the cash injection as will the local economy although Greymouth mayor Tony Kokshoorn, while appreciating the need for the sale, mourns the future lack of ‘added value’ opportunities for the West Coast.
33 Comments
Dairy farming in particular have been on the receiving end with calls for changes to land use. Those who are calling for this are really showing a poor understanding of economics and rational behaviour. Firstly, if the land-use options existed why wouldn’t farmers have adopted them before now?
While not calling for all land use to change, just raising a couple of points.
The term "dairy conversions" has been bandied around much. Land was clearly being used for something like this, and the change in land use seems to have created its own issues, namely waterway pollution, pressure on aquifers and massive debt and stress loading up on the farmers. Much prosperity was promised farmers...how has it eventuated?
On economics, would it still be economically viable if the costs of waterway pollution were no longer able to be met by wider society but by the polluters themselves? (A la Auckland ratepayers funding Watercare's massive investment aiming at reducing waterway pollution by 80% in the next five or so years.)
No question that transport pollution needs to be addressed. See fuel tax, encouragement of electric cars etc...but I find it a curious assertion that older cars are better for emissions than newer cars. Doesn't seem likely on average, but no data is shown. Generally cars models are getting more and more fuel efficient.
....overlooking that fact that the farmers pollute almost the entire length of the river, the city the last few k's. Hamilton City could remove all it's waste, but length of Waikato would still be a disaster.
Next time you are Huka Falls, take a look at the water quality, then check it off as you drive north. I guess it green, but not clean.
Guy : Is it a coincidence that prior to the incorporation of Fonterra as a dairy farmers co-operative , and prior to the subsequent mass conversion of traditional mixed cropping farms across Canterbury , the majority of our freshwater lakes , streams and rivers were swimmable and drinkable ...
... but subsequent to Fonterrras incorporation , the majority of our freshwater systems are too polluted to drink , swim , or even to wade in ...
Do dairy farmers have children , Guy ? ... tell me , what are we bequeathing to them , where will the children play ...
Now that would be a HUGE rewrite of history. Prior to go Fonterra the farms were smaller and way less environmently friendly. I'm all for blaming Fonterra for stuff but it's simply not correct.
I've just spent six years living beside the Otara river in eastern BOP, lovely and clean no algae growths, low ecoli etc. 30 years ago there was probably 40 small dairy farms emptying directly in drains which feed the river and it was in no way clean. That's fairly typical.
Ground water contamination is a bit different and the stocking rates in Canterbury combined with a few other conditions may mean a bigger detremental effect but the reality is the N loses from cropping the same land in the past were significant.
An interesting article by Brian Easton today discussing net vs gross methane emissions:
" it focuses on the methane cloud generated from New Zealand livestock. That cloud is about 13MTs (million tonnes) of methane. Last year around 1.1MTs of it broke down into atmospheric carbon-dioxide. Meanwhile our livestock belched another 1.1MTs – almost exactly the same as the breakdown tonnage.
The livestock-methane cloud has been at the 13MTs level for about forty years. The stability is because the annual gross methane emissions contributing to the cloud have been fairly constant over the last fifty years. That leads to an equilibrium because the additional methane is offset by the methane breaking down.
Fundamentally, it is not the GHG emissions which are the problem but the GHG clouds which reflect the earth's heat; the significance of the emissions is that they add to the clouds. We should measure our contribution to global warming in terms of the GHG clouds. That means the livestock contribution is small, zero or even negative because it is being offset by the breakdown of the methane from past belching."
Unfortunately what is missed in this analysis is that the methane cloud is 2.5x greater than it was at pre industrial levels and hence warming rates due to methane are 2.5x higher than they were.
The cancellation and settling is great - without it we'd be toast already but the equilibria is now significantly higher than it was due to human (and bovine) influence.
The argument you quote is often rolled out to argue against changes and regulation - sometimes by well meaning but miss informed commentators, sometimes however I suspect deliberately. It sounds good but in reality it's only a half truth.
In reality it's not that the equilibria/cancellation exists that is the point/issue it's the level at which it settles which determines the global warming impact (currently 2.5x what we need for a relatively stable climate). The level/equilibrium level in turn is driven by our emissions rates which in New Zealand are largely driven by livestock farming.
The CO2 from ruminants was taken from the atmosphere by the plants the animals eat - it's a cycle. No new CO2 is generated.
Most of the increase in methane in the atmosphere is coming from leakage from oil and gas wells - that has a double effect of not only adding methane but also increasing CO2 once the methane breaks down.
So his answer is that it is just too hard for farmers to change and will hit them in their pockets, so instead, have a go at transport users ie city dwellers, who are already struggling to make ends meet. Nice, but disingenuous attempt to distract attention from the elephant in the room - current intensive dairy farming across large parts of NZ is unsustainable.
Not to mention modern cars are the most efficient ever and have been steadily increasing in efficiency since 2005.
Also interesting how all the figures are quoted in separate % terms rather that relative or absolute terms from which you would likely draw very different conclusions.
Farmers are also motorists and users of fuel, oil etc so following your comment, it could be said that they pay the full cost of carbon through the ETS levy on fuel. SO to follow through on your argument which is essentially that as an end user of an oil/gas industry product(s) because of the levy being applied on that product, which is payable by the end user, farmers shouldn't be paying the carbon costs of producing food, the consumer of that food should be? ;-)
edit - my reply is to kiwi overseas
Hi CO - note that you weren't responding to me but thought I'd jump in anyway.
As far as carbon emissions from fuel usage farmers would be covered for those emissions via the ETS but the key point of concern here is largely ruminant produced methane and to a lesser extent nitrous oxide.
As far as your comment on point of purchase tariffs I think (although this is getting outside of my sphere of knowledge) in principal that would be fine - eventually consumers are going to have to pay the costs to some extent anyway. There are a range of practical implications however, for example fuel is a commodity and we can easily calculate the amount of emissions each litre will produce when burned. Also all of our supply is imported so taxing producers would be difficult (maybe at refinery?) and within New Zealand our "lever" is largely how much we use rather than how it is produced. At the end of the day the aim of the carbon tax is to drive change and while consumers reducing intake of animal protein via higher prices (as per fuel taxes) would be good there's a lot more levers that farmers have at their disposal. Taxing at the farm level allows those with good practice to benefit the most and hence drive the industry to make change. Also the practicalities of tracing carbon emissions across all farms with varying footprints and emission profiles both onshore and offshore through to the end consumer would probably be a nightmare.
For what it's worth personally I think the combination of point of consumer tax and production would and should be there ultimate goal (across all products). Consumers will be driven to purchase lower carbon emission products and producers will be driven to lower emission practices. You could argue that just having one or the other would have the same eventual effect as price increases flow through the value chain but perhaps having them split between the two key points for decision making may be beneficial? Also might help avoid imports skirting our production levied taxes.
Hi Sammy D. For purposes of debate - The real issue for farming is that GHG policy and environment (water quality) policy has not being co-developed with the result that what is good for GHG mitigation is not necessarily good for water quality and vice versa. So what do farmers prioritise - GHG emissions or water quality mitigation? That's the reality on some farms. The studies done so far in dairy is that ghg mitigations are very much individual farm related and the one size fits all model definitely does not apply. Even at farm level it is proving much more complex than perhaps first realised.
You raise an interesting point about our production levied taxes on the cost of NZ produced food compared with imported food, which may very well be cheaper due to subsidies and non production levies e.g. how many agricultural economies which export food to NZ are taxing biological methane? How many agricultural economies are using net emissions for agriculture, not gross like NZ? Why is ag the only sector to be taxed on gross emissions and not net like all the others? Is the aim of this government to reduce NZ's food output and have us become more reliant on imported foods? A current example of that could be pork. Approx 60% of pork consumed in NZ is imported. A significant amount of it from countries that do not have the same animal welfare standards as NZ farmers have to operate under. https://www.stuff.co.nz/business/farming/113999892/pork-imports-from-co…
TomatoesNZ has said that hot house tomatoes grown in the Sth Island in winter, may no longer be a viable business due to the costs of energy used for heating the hot houses, being in the ETS. We could instead be importing tomatoes from Australia. https://www.tomatoesnz.co.nz/hot-topics/ets/
At a recent discussion a science organisation's lead climate scientist stated that there is more than one formula for working out methane emissions. He was questioned on why the formula that is currently being used, which shows a large percentage of emissions from ag, is used and not the methodology which shows methane would be approx 0.5%. He also replied because the current formula is the one in the Paris agreement. However if they agreed to change it..........
As to taxing at farm level - Overseer is the only tool available for working out emissions at farm level, and even the PCE, Simon Upton, questions if it is fit for purpose. Farmers don't believe they should be given a free ride, they want a fair ride. Allowing all sectors except ag to offset emissions is not a fair ride. It is, however, somewhat heartening to hear James Shaw say that the govt needs to revisit the GMO debate. https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12250665
I'm not sure we're totally at odds here,
I'd be interested in knowing more about the methane measuring method you mention - is that impact related like GWP? There is some debate about this for sure, some argue for GWP500, a proposal was put to the UN for GWP20 but it was voted down but the consensus/compromise is where we are now GWP100 - personally I favor GWP50 which is a better match for our decision making and change timeframes.
My understand was that at least on a carbon basis that farmers are able to offset via forestry etc., methane emissions can't be directly sequestered like CO2 so it likely makes sense to measure these on a gross basis.
Regarding cross border trade I see a day where carbon tariffs become a normal part of trade, and potentially a competitive advantage for NZ longer term as true free trade could only be carried out between countries with equivalent carbon tariffs.
Agreed more work needs to be done on the research front and agree that GMO could be a good route (although may cause issues with the likes of the EU). Fundamentally farmers need to both address emissions and water quality at the same time - it would be ideal if this research was connected more closely. Agreed regarding significant variation at farm level which I think is an argument for farms to be a key point of measurement so this isn't glossed over.
I think often arguments around emission and water quality are framed as rules being imposed on farmers but to be fair the other side of the coin is the pollution imposed on the rest of society. As you are I'm just keen to see everyone doing their share of the lifting - for some this will mean more lifting than others however as some people/industries are responsible producing more than others. Just as I will need to significant reduce my transport energy use by getting on my bike (just bought a second hand one recently) and buying an EV for longer trips, farmers will have to change practices and reduce heard sizes.
Articles that skirt the issue or draw illogical conclusions don't help this and just serve to create more argument and division in the place of action.
Agree, we are not totally at odds, hence the lead 'for the purpose of debate'. Unfortunately I didn't catch the name given to the method, it was only mentioned at the start of the question.
2025 is when farmers are supposed to be drawn in to the ETS. At present what those rules for carbon offsets will be are unknown. It has been indicated that where farms contain forestry lots, those on farm forests will not be able to be used as offsets. It's a way yet to 2025 - 2, almost 3, elections away.
True free trade - it's a myth and always will be. Ken Ash, Director, Trade and Agriculture, OECD , France, recently said at the Primary Industries Summit, that protectionism is increasing. As to the EU going free trade in dairy - The sun will ice over before that happens. EU learnt from its war history that it cannot allow itself to be at the mercy of others to feed it's people, so needs to protect is food supply.
I agree with most of this article. But, your opening paragraph is just not true... "In comparison to the vehicle fleets of other OECD members, New Zealand has one of the oldest with an average age of over 14 years. However, when looking for fuel economy this is not such a bad thing as the newer ‘light’ vehicles tend to be bigger, heavier, have larger engines and consume more fuel."
Take a look at the average fuel economy accross all vehicles between now and 14 years ago and you will find that fuel economy has increased, not decreased. In this time, some vehicles have had massive efficiency gain - take for example the Mitsubushi Triton, 14 years ago in 2005 it's fuel economy was 10.5L/100km and in 2019 it is 8.6L/100km, then also the Ford Courier (no Ranger in 2005) was 10.6L/100km in 2005 and the new Ranger Raptor is 8.2L/100km - these efficiency gains have been achieved despite both weight and power gains in these vehicles.
The spotlight seems to be currently on farmers, so why not lead by example and do something about our own light vehicle transport? I have just bought an EV, so I'm doing my bit and making my argument and my postion stronger against the city-based naysayers.
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