The Interim Climate Change Committee is recommending farmers pay an emissions tax of 1c/kg MS, 1c/kg for beef, 3c/kg for sheep meat and 4c/kg for venison to be levied through the Emissions Trading Scheme and initially collected by processors.
However, the Government0 says it will consult on options for collecting the levy up to 2025 when the ICCC says technology will allow emissions to be calculated and levied at individual farm level.
The tax is expected to raise $47m to $95m a year over the first decade.
It will go into a new Agricultural Emissions Fund for investment into programmes to help farmers cut emissions.
A new tax is to also be introduced on nitrogen fertiliser at manufacturer or importer level as soon as practicable.
Committee chairman Dr David Prentice says the emissions tax is a critical first step for farmers to understand their emissions.
But the primary sector is unhappy at being required to collect the tax and has countered by launching the pan-industry group, Primary Sector Climate Change Commitment, to create incentives and a framework it says will enable the sector to address climate change challenges.
Representing the agricultural, horticultural and arable sectors, it has created a five-year plan to reduce emissions by establishing farm-based systems that allow farmers and growers to calculate their emissions and offsets at the farm gate and assess options to reduce or mitigate those emissions.
Climate Change Minister James Shaw says the committee considered but rejected a similar plan, questioning the sector’s ability to implement it.
Meat Industry Association chairman John Loughlin says the solution to reducing emissions is a system owned by farmers and growers where they are accountable for achieving reductions while ensuring New Zealand’s second-largest goods exporter and its largest manufacturing industry sector remain viable.
“The alternative, an emissions tax on processors based on the Emissions Trading Scheme, will do nothing to reduce on-farm emissions.”
Loughlin says the commitment is for farmers to pay for their emissions where those emissions are contributing to increased global warming.
But it requires a price to be set in a way that incentivises farmers to innovate, adopt new technologies and retire low production farm areas for carbon sequestration.
“It is the things that are done on individual farms that will make a difference,” he says.
Beef + Lamb NZ chairman Andrew Morrison says faster progress will be made by working with farmers than having an interim processor tax.
“A new and blanket levy at the processor level won’t incentivise any on-farm changes and will be seen by farmers as a new tax, which will undermine farmer’s efforts to make positive changes, especially as individual farmers won’t reap the benefits of any improvements they may make.”
Committee chairman Dr David Prentice says for nearly two decades there has been debate about how to deal with agricultural emissions.
“Acting now will avoid having to make more disruptive changes later.”
The staged introduction of the committee’s package provides farmers with practical support to enable them to manage emissions daily, he says.
A joint statement from Shaw and Agriculture Minister Damien O’Connor hailed the package as consensus with farming leaders over the pricing and management of emissions.
“We know our trading partners expect climate-friendly products so our farming sector has to make this transition in order to protect the value of our agricultural exports,” O’Connor said.
Shaw described farming leaders agreeing on the emissions pricing scheme as a breakthrough.
“The significance of this cannot be understated when you consider how things stood a few years ago.
“Of course, there is a significant amount of infrastructure that needs to get laid down across tens of thousands of farms to make that work.
“Some of that infrastructure still needs to be developed. That’s why we need to work closely together over the next few years to make this work.”
