Rod Oram: Farmers can do much better

The Productivity Commission suggested farmers may not have to do much more to reduce methane emissions. But Rod Oram argues farmers should drop their usual excuses and take greater action.

New Zealand can achieve a high value, sustainable economy by drastically reducing its carbon emissions over the next three decades, the Productivity Commission lays out in extensive and persuasive detail in its final report on the subject.

Since its draft report in April it has done a lot more work on some crucial issues. For example, it has much improved its analysis and recommendations on pathways for various sectors, on how to price and reduce methane, on the electricity sector and on making the transition socially just and equitable.

Given the journey to a low carbon economy is already affecting all our lives, the Commission’s work is essential reading. Handily it offers a variety of ways to do so, from its 600-page report to a one-page summary. All are available here.

This column will deal with agriculture. Ones in coming weeks will address forestry, short-lived versus long-lived agricultural greenhouse gases (GHGs), transport, innovation and socially just transitions.

Agriculture is the one area, however, in which the Commission’s work is disappointing in some crucial respects. It offers no analysis of the critical issues in global food systems which are sparking profound changes our farmers can’t escape, as my recent column reported.

Forest a fifth of our farm land

It goes easy on dairy even though it is the sector which is our largest producer of GHGs; and it goes hard on forestry, suggesting we need to plant up another 2.8m hectares of forests, about a fifth of our current farming land, to help absorb the emissions left over from our inadequate efforts to reduce them.

As these two charts below show, dairy farming is the biggest source of GHGs from land use, and by far the biggest contributor to rising agricultural emissions over the past 25 years. Fonterra’s farmers’ operations alone account for one-quarter of New Zealand’s GHGs.

In contrast, sheep and beef farming is less of a problem. Its emissions have been falling, its farmers have more land use options, particularly forestry, to reduce their emissions, and they are somewhat more attuned to the competitive threats from new food sources which have negligible climate and environmental impacts.

Yet, to ensure methane from livestock farming creates no additional climate warming beyond current levels, methane emissions would have to fall by 10-22 percent below 2016 levels by 2050, with further reductions by 2100, the Parliamentary Commissioner for the Environment concluded in a recent report.

Include farmers, but give them free ETS credits

Based on this and a raft of other evidence, the Productivity Commission recommends that agriculture be fully included in New Zealand’s policy framework for reducing GHGs, and key mechanisms for driving that such as the Emissions Trading Scheme.

However, it says the agricultural sector should get hefty relief for the next 20 to 40 years, mostly in the form of free ETS credits, so it is not disadvantaged against other countries which let their farmers off more lightly because they contribute much less to their economies’ emissions.

Our agriculture sectors have to play a big role in GHG reductions because their impact on climate change is so large. Methane accounts for 42.8 percent of our GHGs, with 86 percent of those coming from farming; and nitrous oxide accounts for a further 11.6 percent of our GHGs, with 95 percent coming from urine, dung and synthetic fertilisers. In contrast, carbon dioxide accounts for 43.8 percent of our GHGs, with 43 percent coming from our transport fuels. Moreover, methane is 28 times more potent in its warming effect and nitrous oxide 265 times more potent than carbon dioxide.

It can be done

Many farming science leaders believe the target of up to a 22 percent reduction in methane by 2050 is broadly doable using current and likely near-term improvements in farming practices and technologies. It would require nothing more than the roughly 1 percentage point a year improvement in GHG efficiency per litre of milk and kilogram of meat farmers have been achieving over several decades; and no increase in stock numbers.

As the Commission points out, the highest-emitting farms produce roughly twice as much methane emissions and three times as much nitrous oxide emissions as the lowest-emitting farms per hectare. The large variation is due to factors such as climatic and soil conditions.

However, the way the farm is managed is also important so disciplines such as pricing emissions and applying the ETS will help drive better practices and more appropriate land uses, particularly if the responsibilities are sheeted home to individual farms.

That modest goal is all Fonterra is committing its farmers to. Last November it said it had “set an interim target of climate neutral growth to 2030 for on-farm emissions in New Zealand, which means any growth in milk production will have its resulting carbon emissions reduced or off set.”

Nowhere nearly good enough

This is a climate fudge, I wrote in a column at the time. Fonterra’s subsequent submission to the Commission was equally inadequate.

The fact is a 22 percent reduction in methane would only achieve no additional climate warming. Thus, the harder and absolutely essential task is to reduce methane emissions much further. Likewise, big cuts in nitrous oxide emissions are essential too.

This is a responsibility the dairy sector refuses to take on. It offers three main excuses: The technology isn’t available; even if it was, the cost of monitoring individual farms’ compliance would be prohibitive; and if dairy output was cut back here to reduce emissions, the slack would be taken up by higher emitting dairy farms overseas.

None of the excuses are valid

The dairy sector and government have yet to get even faintly serious about emission-reducing science. The government spends less than $20 million a year on such science, out if its R&D budget of $1.5bn a year. It and the multi-billion dollar dairy sector can easily afford to spend much more.

The sector needs to transform its science ambition too. One farm science leader interviewed for this column doubted that more investment in science would drive faster progress.

If that were true, then our food and farming innovation systems are completely incompetent and useless in the face of massive investment in new food technologies by Silicon Valley venture capitalists and major dairy competitors such as Nestlé and Danone.

Emissions can be measured

The myth of the high cost and high impracticability of on-farm monitoring was busted by Beca, the consulting engineers, in research for the Government’s Biological Emissions Reference Group, which was included in the Commission’s report.

The scare-mongering this week from some farm leaders of costs approaching $240,000 per farm per year were wild extrapolations ...

Beca estimated that the combined annual costs to government and farmers of a farm-level point of obligation would be close to $39m, with $30m of this borne by farmers. Of this, $14m would be brokerage fees to purchase NZUs carbon credits and $11m for engaging certified nutrient management advisors.

The cost of credits would be on top of that. But if farming was given free allocation of credits for 95 per cent of their ETS obligations, then the administrative costs to farmers of a farm-level point of obligation would average $1,300 for each farm, while the obligation to purchase units would be a yearly average of $1,600.

The scare-mongering this week from some farm leaders of costs approaching $240,000 per farm per year were wild extrapolations based on no technology progress, a carbon cost of $200 a tonne (versus less than $30 now), and no free credits in the ETS.

Enough with the excuses

Likewise, carbon leakage is equally a myth. The top 10 dairy nations produce some 350 million tonnes of raw milk a year. New Zealand’s production is barely 5 per cent of that. Moreover, any modest reduction here would likely be filled by high efficiency, and relatively low emission producers in those countries who already export, as the Commission points out.

So, enough of the excuses. Given the survival of dairying globally depends on it achieving much great sustainability, our dairy sector needs to behave like the global leader it prides itself on being. The Commission urges it to be so:

“New Zealand could make a much larger contribution to reducing global agricultural emissions reductions than it can achieve in domestic reductions alone. The emissions intensity of agriculture in New Zealand is much lower than the emissions intensity of many large, but inefficient, global producers. As a highly productive producer, New Zealand possesses technical expertise that could assist other countries to reduce their emissions intensity through large efficiency gains. The successful development of mitigation technologies in New Zealand will also benefit agricultural producers globally.”

Landcorp's example as a leader

If Fonterra and other dairy and meat farmers and processors who continue to evade their responsibilities want to know what agricultural ambition looks like, they should take a look at Landcorp, our largest farmer. It has committed to being carbon neutral by 2025, while also driving greater value through its Pamu brand of products.

In its report, the Commission quotes at length Steven Carden, Landcorp’s chief executive:

“New Zealand's pastoral sector will only survive if our animal products are niche and premium. To achieve that our farms need to produce food that is different – and different in a way that’s better for consumers. And not just because it’s from New Zealand. But because it has scientifically verified advantages that consumers trust. So they’ll pay more for it. Our investments in new businesses and products like sheep dairy and deer dairy products are examples we think have a future.

“…our reality is that we will need fewer animals on our land in the future and more plants. We will need to shift our land uses from farming animals to more forestry and plant products. And to avoid replacing the production of an animal commodity for a plant commodity, our land uses must focus on producing unique plant cultivars that have particular functional health benefits.”

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