Allan Barber sees most rural organisations responding favourably to the compromises the Government conceded on emissions pricing, accepting more HWEN negotiated positions

It looks too much of a stretch to imagine there will be a speedy resolution to the war in Ukraine unless Putin has a Saint Paul-like conversion on the road to Kyiv or quite simply runs out of troops and firepower. But peace between the government and the farming sector may be about to break out following the last gasp release of the government report on Agricultural Emissions Pricing under section 215 of the Climate Change Response Act, holding out hope the main disagreements on this thorny issue can be overcome.

The MIA is “cautiously optimistic about the government’s changes to its agricultural emissions proposal”, while B+LNZ says the report is a significant improvement on what was released in October, although the high level nature of the response means there are still important details to be confirmed.

The key issues to be resolved are in summary: the warming targets for which the latest science will be taken into account including the use of GWP* as opposed to GWP100, the impact of offsetting rules within the ETS on sheep and beef farming, the price level for methane to be applied at the lowest level necessary, the role of the industry in price setting, ensuring equitable treatment of sheep and beef farmers or compensating them appropriately, and certainty about the recognition of sequestration of all vegetation categories by 2025.

The concessions made by the government in its pre-Christmas report appear to accept in principle virtually all the points raised by He Waka Eke Noa in its original submission which were rejected or modified in the government’s October response. The only major points of contention, apart from achieving agreement on the detail, appear to be the government’s desire to retain the option of a processor level levy as a backstop and the primacy of the Climate Change Commission in determining the price of emissions.

The first question that arises from this sequence of events is why the government persisted in alienating the agricultural sector for another two months before suddenly accepting almost everything it had previously rejected. The answer is probably the inevitable tension between the perspectives of Labour’s Agriculture Minister Damien O’Connor and the Greens’ James Shaw as Minister for the Environment. O’Connor has amply demonstrated his support for the agricultural sector, despite having to follow his party’s line on emissions, whereas Shaw is compelled to promote the more extreme Greens view.

It would appear Shaw’s more purist perspective won out in October, when the Ministers no doubt hoped its response would be accepted without too much objection, but the industry’s angry reaction must have made them realise it was an unwinnable battle. There is too much at stake for the government to get completely offside with the farming sector for two reasons: its huge contribution to the country’s economy, especially in the absence of tourism and education for the past three years, and the potential for the whole HWEN partnership to blow apart, leaving the government with egg on its face without a scheme to implement.

The reaction of Groundswell and its supporters, as well as the refusal of Federated Farmers to join its HWEN partners in responding to the initial government response, will have made the Ministers realise they faced more extreme farmer resistance than that from HWEN partners, notably B+LNZ, MIA and DairyNZ. The concerns of Maori farming incorporations must also have given them pause. Politics after all is the art of the possible and before the release of the December report it was looking increasingly impossible to achieve willing participation in a core government election commitment.

The government’s intention is to finalise all the details of its emissions pricing scheme early this year which hopefully is not too ambitious a target, given B+LNZ and MIA’s list of topics for discussion, presumably echoed by Federated Farmers who may be less tolerant in their requests. While the HWEN partners’ demands are absolutely understandable from the perspective of the members they represent, they would do well to recognise the extent of the most recent concessions and the straitjacket the government has to wear. It is restricted by the commitments it has made in global forums like the UN, as well as the attitudes and opinions of a sizeable and noisy percentage of the electorate as it faces a General Election later this year.

In the words of Abraham Lincoln, you can’t please all the people all the time, so it is reasonable to expect the government to attempt to please as many as it can as much as possible. But it must also weigh the economic consequences of hamstringing New Zealand’s largest contributor to its GDP and export income in the face of serious farmer and agricultural sector opposition.

On the other side of the coin, the HWEN partners also have to weigh up the extent to which they can afford to play hardball in the final discussions with the government to arrive at a negotiated agreement which is fair and equitable for farmers, while at the same time able to be sold to overseas parties and the New Zealand electorate.

The last thing farmers need is to be accused of getting away without accepting their obligation to make a sufficiently serious commitment to climate change mitigation. I sense the agricultural sector in New Zealand is currently winning the PR battle, but it would not take much to tip it the other way. It is preferable to complete a historic agreement on fair and reasonable terms acceptable to as many people as possible, including farmers.

Current schedule and saleyard prices are available in the right-hand menu of the Rural section of this website.