While stuck in a traffic jam as a result of a road accident ahead I began cogitating on the issue around the farming externalities to both water and the atmosphere, no doubt brought on by my recent look at the Netherlands experience.
I think most people accept that the problem exists so given that you would think that finding a solution would be relatively simple. Unfortunately in this case, unless I’m very much mistaken, it won’t be the case. Getting agreement over the ‘Three Waters’ proposals has shown what a difficult path the Government needs to walk and in that case the ‘government’ is wearing the bulk of the cost.
So, any solution to try and improve water degradation induced by farming practices where potentially farmers could end up wearing the cost on one hand, or at least are heavily compromised, or Joe Public on the other, is bound to end in extreme reactions. The European farmers reactions to anything that threatens their way of life illustrates that.
The Netherland’s example really brought out the farmers, even though it had a substantial financial package that went with it, so if farmers here are going to be expected to pay all the costs of what society says it wants, then all hell is liable to break loose.
This led to the next question: if farmers, (and lets just stick to dairy farmers for time being although I believe it could easily be argued that the problem extends further than them) are not to directly pay, what is the cost to ‘buy them out’ likely to be? This is really a “how long is a piece of string question” as depending upon assumptions made you could get quite a different answer, but none of them are pretty.
My calculations were based on the assumptions to get to a situation where our waters run clean we would need to, over the whole country, reduce the dairy herd by 25%. Some areas the reduction would need to be greater and others the reduction needn’t be so drastic. Given we currently have a national milking herd of around 4.9 million cows the reduction in cow numbers would be:
Required cow reduction, 1,225,000
Current average value per animal, $3,000 each
Total to be compensated = $3.675 bln
With this scale of reduction there would be very little ‘salvage value’ in the cows and they would end up being processed for meat patties (sadly).
This is just the first cost, as if you are taking away 25% of a farmer’s income there would/should be some form of compensation. I took the approach of the not all a cow earns is profit (obviously) and there is also some new ability to generate income from the land not now allocated on a fulltime basis to dairying (presume some for of cash cropping which could assist in mopping up nutrients might be encouraged and hopefully profitable). So, I allocated 30% of the lost cost potential income as ‘income compensation'. This would hopefully be enough to pay mortgages and a share of fixed costs. It may also not be enough. So:
Milksolids farmgate price @ $8.75 per kg
Milksolids per culled cow is 400 kgs
and that comes to $1050 per cow.
This needs to continue (in my view) for 10 years to allow farmers time to adjust.
That for all the cows involved comes to a total of $12.9 bln plus we still need to add back in the $3.7 bln for the cull cows makes a grand total of $16.5 bln of compensation required so far. At this point if the government and society didn’t realise they had a problem then they should now. It should be put into the context that dairying contributes about $20 bln per year in gross exports and so presumably this would decrease although not by the full 25% as some new enterprises are likely to emerge as land becomes available. This all makes it a very expensive exercise. (It is worth adding here that if the farmer compensation of a share of lost income per cow was lifted from 30% to 50% per year then the total leaps to $25 bln)
As earlier stated, this is a rough and ready approach but given the Dutch war chest is €25 billion and to reduce all livestock (cows, chickens, pigs etc) by 30% and also extends beyond agriculture (they have reduced the speed limit to 100kms per hour to try and limit N emissions from cars), our $16.5 bln could be a credible estimate - just for dairy farmers.
There will be some positives in the outcomes apart from just the clean water. Given New Zealand’s dominant position as a dairy products exporter, the price of milk products is likely to increase. However, the biggest benefit and potentially this could swing over both the government and general society is it would get New Zealand to a net zero greenhouse gas scenario a lot earlier than would be otherwise possible, if indeed it is possible without a wholesale livestock reduction.
By itself this could be considered cold comfort, however, when figures like $5 billion per year (and greater) are being discussed on offshore credit purchases to balance the GHG books then the average $1.65 billion per year (or whatever) starts to sound more feasible.
It is likely this would also lower the demand and price of credits within New Zealand, this may be seen as a mixed blessing by some forest investors.
It’s the farmers that will need the most convincing, I suspect a carrot and stick approach will be required as the Dutch appear to be instigating.
The conversation is overdue and there does not appear to be an appetite by the government to extend their thinking (at least publicly) to go down this path which is disappointing as we seem to leave things to the last minute (compliments of our 3 year electoral term) and face greater costs than could be otherwise.
This topic is likely to continue for some time to come (years). What the final outcome will be is going to be interesting.
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33 Comments
I am feeling a bout of ‘whataboutism’ coming on here. We seem to be going down the track of mutual trust in each other on a global scale. Lot’s of great intentions until one of the biggest polluters internationally blinks and institutes a system whereby the lifestyle currently enjoyed by their citizens begins to pull back. Probably by simply not having enough income to maintain it through increased individual taxes and subsidies their country will need to pay to the businesses that need to retract. i.e. The polluters. Who amongst the big players will ‘blink first’.
We could tax carbon footprints - charging the consumers for cumulative carbon pollution. This would negate the problem of relying on the honesty of foreign governments. However this would negatively impact the size and structure of our highly consumptive state sector.
Only an ideological fanatic would propose following the Netherlands right now. (Its not just 30% across the board, it also included 95% in select regions, shutting farms down.) I think it would take a few years to escalate from Groundswell and Parliamentary mandate protests to the current situation there but if the govt tried I do think we would get there.
I also think you would find farmers would get popular support from "urban NZ" like the Netherlands, this will not be proposed in a vacuum and I think it would be easy for the situation to get framed as an existential threat to agriculture in NZ. The moment the public understand that milk and meat prices will rise they will end support for this idea.
I guess the issue is, the Earth's climate system is being destabilised at an accelerating rate. Those profiting from the release of heat trapping gasses aren't really paying the price for the coming ecological collapse. Now you could say stuff the planet and future generations, I want my dollar now, but what does that say about the human species as it extincts itself? Personally, I blame the cult of endless growth for our predicament. There is nothing wrong with farming animals, it's the scale that's the issue. The scale of pretty much everything humans do is incompatible with a livable future.
Lets keep local pollution (nitrogen) separate from global climate issues and food production separate from the economy.
I don't agree that we should be starving people or dictating to them what their diet and nutrition should be because of computer models and a few peoples' idea of the "greater good".
Ultimately, the economics of plant based proteins will destroy the large scale meat and dairy industries anyway, outside of the luxury end of the market which NZ is extremely well placed to serve (particularly if we clean our act up re rivers etc.)
Fonterra / Beef & Lamb's time would be better spent working out what a transition looks like for their stakeholders, rather than fighting a rear-guard action.
When I see NZ's rolling hills starting to be planted in GM peas or whatever it is that's going into these "foods", I'll start believing this future.
I get sceptical fast about these foods when you start getting past the marketing and look at the details. They are currently a black box of ingredients and processes and still being sold at luxury meat prices. I don't currently consider them a nutritional replacement for meat and if i want a vegi filling the kebab shops already have a solution.
"When I see NZ's rolling hills starting to be planted in GM peas or whatever it is that's going into these "foods", I'll start believing this future."
I'm not suggesting that these will be NZ products, unless we locally get our act together. That's the actual risk to our GDP / export earnings - someone else does it better, and we become an importer of protein.
"They are currently a black box of ingredients and processes and still being sold at luxury meat prices."
Agreed. But when synth meat and milk is available at a quarter of the price through economies of scale and is effectively indistinguishable of the real thing, market suppliers and consumers will choose with their wallets. A lot of people in this country can afford meat and milk today, and it's a national disgrace.
How does big plan work? We develop our own proprietary proteins avoiding overseas patents and try to convince the rest of the world they are superior and safe nutritional replacements? The current big players are going to hit us with all kinds of regulatory hurdles, their way will the be the most tested and safe and who knows about the process we used. Or, would be be content with just growing the raw protein?
It will be 30 years absolute minimum before this stuff is not a proprietary mess where people are dependant on particular companies for some of their diet. There will be backlashes and actually solving the technical problems is an if not a when (are we more or less likely to solve nitrogen and methane emissions first?). It's narrative synthetic proteins are just around the corner maybe I'll believe it when you can show me a geographic area with half the supermarkets' butcheries filled with plants.
"We develop our own proprietary proteins avoiding overseas patents and try to convince the rest of the world they are superior and safe nutritional replacements?"
Pretty much. NZ biotech is very good at this stuff. The convincing is basically marketing anyway, just as it is with "100% pure" which has served us very well, even though it's complete b*llshit. I don't know how the big plan will work in a macro sense, but the big brains better start thinking about it.
"....maybe I'll believe it when you can show me a geographic area with half the supermarkets' butcheries filled with plants."
By then, it'll be too late. That's my point. We either need to adapt now, or the industry is dead in 20-30 years. Forget the supermarket; in that time horizon, people will be printing synth-steaks in their kitchen.
We can do just as much or more damage to nitrogen and pesticide toxin release, and carbon sequestration by constantly tilling soil and spraying. Damaging the habitat of our pollinators and the organisms that produce healthy soil by substituting these pastures to plant based crops could be as bad, so we have to be extremely careful how we go about the transition to plant based meat production.
Also the artificial growth methods, essential vitamin, mineral and amino acid manipulation for production of plant based meat means the elimination of any rumination/digestive benefits created by the digestive organisms specific to each animal. I do not think we yet understand how this might affect the true healthfulness of plant based meat products in comparison to true meat.
I hope that it is as healthy because i would love to eliminate animal suffering, but I have serious concerns about playing god with the essentials of our food system, and negatively affecting human wellbeing on such a grand scale.
So we have got to the stage we must deny physics and pretend fairytale endings? Nitrates in water is local, nitrous oxide local, but also global. I agree what people eat should be a basic freedom. Problem is we have abdicated responsibility for our freedoms to people who cannot grasp the concept of finite planet. The corollary of this is having what might be considered a "freedom" removed because of the sheer weight of humanity bearing down on the planets finite systems. Its past time humanity grew up!
And there you have it - consumption (our our presumption that it can expand forever and be good for ‘growth’) is ultimately where the bucks all stop. Until we accept that then no amount of sacred cows will help us, the same affluent do-gooders who are screaming about earths fragility are still flying to raro for their holidays and renovating their homes every five minutes.
So here we go again despite the mounting evidence which shows that throwing money at reducing agricultural GHG will have no effect what so ever
Guy you are postulating that we should reduce our incomes and that of the country overall but you do not appear to have really evaluated the benefit of doing so
and especially if the problem you are seeing that needs to be addressed is a global one
So we reduce our food production which slack can be picked up by a less efficient overseas producer - overall a global minus as well as a minus to NZ
and never mind that the UN specifically excluded food production from CC protocols
Exactly. The climate issue isnt going away. The more the earth heats up and weather events hit the west (europe and usa) like they did this year the less tolerant their voters and governments will be of their own farmers and og those in other countries who are not doing their bit.
I am no expert but - in the same way germany just found itseĺf in a total mess for reliance on russia for gas - nz farmers face a high probablity they will soon lose china as a customer as it falls out with the usa.. and the rest of the world may refuse to buy our milk etc if we havent sorted our farming emissions (it may be enough that our emmissions from shipping so far tip us over too)
I am not sure the only option is 'less animals' either. There may be for farmers to get ahead of the coming wave and proactively find ways to sort their emmissions and balance their export markets.. before (as germany found with gas) the world suddenly changes and they find themselves without customers. Urbaners will or not.
Nice to see a journalist do some rudimentary calcs at least to see roughly what the extent of the problem is. Surely a phased approach is needed. No increase in the dairy and perhaps other herds. Any reduction in the herds over at least 10 years and preferably 15.
Many of the interest articles have a brief note as to who the person is writing the article. In this case there wasn't and I assumed he was an agricultural journalist. I see he is actually a university lecturer in farm management who wrote this article (columnist)
Or rather than spending $16.5Bn+ on a destocking payoff (which will be immensely hard to administer and govern), offer that funding up to farmers to transition to lower GHG exports / better land use over a 10-15yr horizon.
Refocus the land that *can't* be transitioned to supply a monopsony domestic buyer that breaks the supermarket duopoly to ensure a fair price to producers, and much cheaper staples meat and dairy staples to NZers.
The world is rapidly turning to plant based proteins (both meat and dairy) - with a bit of vision, NZ could be a leader here. We'll always produce meat, and it will always be able to command the best prices, but at a point, the demand simply won't be there outside of the luxury end of the market.
To my mind it would be counterproductive to "retreat" from the problems by a cull when government subsidy of 'win-win' (i.e., keep the production levels but lessen the impact) solutions might be available;
https://www.newsroom.co.nz/wet-coast-cow-cockies-say-get-off-the-grass-to-new-rules
For example, it would be good to ask these farmers to what degree a no-interest government loan would help with their bottom line. We/society subsidise tertiary students this way as it is seen as an investment in our future - to me, better practice agriculture is an investment in our future as well.
Another thing I'd like to see is a payment to farmers for retiring pasture back to wetland where appropriate. There are so many positive environmental services that marginal agricultural land could be put to.
This isn't all about nitrogen though is it. If it was there are natural agricultural methods to assess the appropriate levels to minimise nitrogen use and fix nitrogen AND carbon dioxide in soil. Wide open pastures with mostly monoculture grasses as far as the eye can see is todays lazy farming practice. Extensively using nitrogen fixing trees, shrubs and grasses in those pastures and subsidising the provision of these to farmers(much like we with trees for erosion prone land) could fix a large proportion of this issue.
Do we effectively legislate and monitor the appropriate number of cattle farmed within close range of rivers/steams/lakes/springs etc to minimise the use of nitrogen and other chemicals in sensitive areas?
Fixing trust/corporation legislation and tax loopholes to ensure locally grown profit is not offshored as a faux IP expense would provide funds for compensation to farmers unable to isolate enough land and fix enough nitrogen to subsidise costs.
There are definitely ways to mitigate and resolve these issues, but not enough political will and too much greed to do it.
"Lazy farming practice"? So pressure from consumers to produce calories for the lowest price has nothing to do with extractive farming? Is the holy economic grail of "increased productivity" not driving the race to externalise as many cut corners as possible? Of course mixed sward pasture using legumes is the best option, if not trying to grow every possible mm of grass on every square metre of the farm. The perfect conditions for growing white clover is what gave NZ it's historical advantage over northern hemisphere farmers. Since then, in our short sighted infinite wisdom, we have introduced clover pests that virtually wiped clover out of NZ pastures. It's only since the introduction of predator and parasitic antagonists clover stated appearing in pastures again recently.
Not long ago, before conversions and intensifications based on inputs like PKE and centre-pivot irrigation, weren't we at the kinds of stocking rates that the author suggests in this article that we need to go back to now? What was it that made us decide to increase stocking rates then? Was it that the possibility of intensification (and little need to account for the externalised effects) meant there were bigger profits to be made...and thus the value of dairying land and marginal land increased accordingly? And then new entrants had to borrow more money to pay for the land, which meant that they got locked into paying bigger mortgages, which meant that the higher stocking rates became essential for profitability, where previously lower mortgages meant that lower stocking rates were sufficient? If so, we have identified that pricing externalities and reducing the value of dairy land is a way to reverse the change. Should society as a whole subsidise that to soften the blow on the current farmers? Perhaps if society as a whole shared in the profits previously? Perhaps if we would do the same for other businesses? Or maybe there could be a windfall/environmental tax on those who saw their land values appreciate as a result of over-stocking? Rather than punishing the current set of farmers who had to pay the high land prices to get in the game? I'm not sure, but these surely are some of the questions which might follow, before deciding that taxpayers should be the ones to pay.
There is no need for compensation. To state that no policy change is ever allowed to make someone worse off, would suggest that we would never be able to pass tax increases for example. A phased in period of externality pricing that would encourage land use changes at the margin first, makes the most sense. I respect farmers but there's nothing that says that working the land must involve intensive livestock farming. NZ can easily focus on horticulture and other crops like hemp etc. Over time climate change is expected to make NZ's climate more favorable for crop growing.
I wearily suggest, to all those who advocate a switch from extensive animule farms to intensive arable and cropping, to go back over Interest articles dealing with this possibility. As Keith W , no doubt equally wearily, notes in many such exchanges, there just ain't that much arable-capable land to - er - Arabate. And intensive hort has its own externalities like a dependence on FF, fert, water, and - oh irony - lotsa stoop labour. ...
Not letting topography, soil type, rainfall, temp etc etc get in the way of proposing large increases in intensive arable areas ........ Reality is certain regions, and then farms within regions (even neighbours), vary vastly in land use ability. Cropping requires specific conditions and there is limited suitable land. However we have bucket loads of land well suitable for pastoral farming. This could all be pine trees instead if you prefer.
How about increasing support for wool and lamb ? Wool is a brilliant product, ticking plenty of sustainability boxes. Well under supported by the consumer despite this, quite bizarre.
I perceive two distinct problems: land utilisation and climate change.
Most farmers are addressing the utilisation problem by implementing good land and husbandry practices.
The other problem is driven by reasons approaching religious fervour. It is predicated on the hypothesis that climate change is driven solely by human activities. The proponents of this inadequate hypothesis advocate reduction of emissions, which will have minimal impact, and by adaptation using questionable targets. Both at enormous and unwarranted cost to our society.
Adherents to measures of adaptation—like reducing the number of cows in the country—have little concern for those impacted by such policies. They will not even consider compensation. In their minds it just has to be done, "to save the planet". One commenter here baldly states this. "There is no need for compensation."
Attitudes are beginning to change. Bjørn Lomborg advocates adaption and a recent comment from James Shaw suggests he might be moderating his views. In the meantime farmers will have to "tough it out" and hope that sanity will prevail sooner rather than later.
Its very easy to portray the Greens as anti farmer , but its not true . Perhaps you could say Greenpeace are , but they are a corporate entity in themselves.
I have no doubt that Shaw wants a reasonable package for Farmer willing to take part in a plan to reduce emissions , and wants a eal that is fair to them . I'm also sure he is not going to stand for any suggestion to intensify , or even to carry on as we are.
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