Dairy sector profit still on the table, but margin gap tightens
DairyNZ’s latest Econ Tracker update shows most farms will still finish the season in a positive position, although the gap has narrowed compared with early season expectations.
The two industry bodies are the key protagonists behind the Primary Sector Climate Action Partnership - He Waka Eke Noa (HWEN) - whose aim is to find an 'industry solution' to pricing agriculture emissions. Both BLNZ and DairyNZ fronted several roadshows during February and March which proposed three options:
- An on farm levy
- A processor levy
- Placing agriculture into the Emissions Trading Scheme (ETS)
"There was a strong preference for the farm-level levy option. Farmers told us they want to be recognised and incentivised for individual actions, have a say on the farm emissions price and have choices about their farm management," according to the industry bodies' feedback analysis.
"However, there were concerns about sector readiness for a farm-level pricing system and the cost of implementing this by 2025."
BLNZ and DairyNZ claim more farmers wanted to move straight to farm-level pricing in 2025 than wanted to transition to a farm-level pricing from a processor-level hybrid levy.
"They told us they didn't want agricultural emissions to be priced through the ETS." The industry bodies added that farmers wanted better recognition for sequestration happening on farm - including moving the 2008 baseline. "Farmers want to keep the cost of administration of the entire system - and the levy price itself - as low as possible to achieve the outcomes and the revenue raised recycled back into research and development and use of new technologies."
Both BLNZ and DairyNZ say they will continue to call on the Government to report on warming and emissions, as well as committing to using the latest science when it reviews the methane emissions targets in 2024.
Meanwhile, they say the farmer feedback will be used to inform discussions with HWEN partners and help develop the recommedation it will make to Government, which is due 31 May. They add that HWEN will release information about all submissions received from across the agriculture sector at a later date.
Not Engaged
Despite Beef+Lamb NZ chair Andrew Morrison describing the HWEN consultations as "one of the most important issues for farmers in 2022", farmers seem to have been disengaged.
Of the estimated 52,293 real farms in NZ (according to BLNZ's own 2020 figures), less than 5% or only 2,600 farmers bothered to turn up to the 31 in-person - 19 of which were held in the North Island and 12 in the South Island - or the 24 online meetings held for the HWEN roadshow.
