If a similar change in land use happens in Southland the farmer-owned co-operative could be more exposed because the bigger operators in a region are likely to be most affected, chairman Murray Taggart said.
Anecdotal evidence indicates the scale of land use change could mean the loss of half a meat plant in the eastern North Island, he told shareholders in North Canterbury.
The industry believes taking out half a million stock units would essentially close down the equivalent of one plant, he told Farmers Weekly.
The transparency of the scale of forestry interests buying farmland appears greater in the eastern North Island than in other regions.
It is possible the full extent of the loss of productive farmland might not be picked up until the damage is done.
And it is unfair farmers can’t offset farm methane emissions by planting trees on their own properties when the Zero Carbon Bill will let big greenhouse gas emitters like Air New Zealand and others buy forests as offsets and carry on emitting.
“A solution needs to be fair across all sectors.
“We believe in the care of the environment but it needs to be balanced and fair to farmers and their communities.”
In Alliance’s Zero Carbon Bill submission chief executive David Surveyor said that differing treatment is inconsistent, unjust and pits one section of NZ society against another.
It also fails to recognise a key point of the Paris Agreement that climate change action should be done in a manner that does not threaten food production.
It ignores the global shortage of food relative to global population growth.
If the Government insists on a net zero target for carbon dioxide emissions it will accelerate the conversion of productive pasture, used for food production, to pine forests.
Surveyor said Parliamentary Commissioner for the Environment Simon Upton has estimated the ability for fossil fuel users to permanently store their waste on otherwise productive land, by buying forestry credits, will result in at least half the pastoral land now used by the sheep and beef sector being converted to pine forests by 2070.
Alliance said farmers should be able to offset methane emissions by planting trees on their farms and the Bill should be amended to change the methane target from a gross to a net measure.
The proposed target of 10% by 2030 will result in the equivalent of 10% fewer livestock and a matching reduction of jobs in farming and processing.
“This is because there is no technology currently available to reduce methane another way,” Surveyor said.
The target is impractical and not based on credible science.
Specifically, for Alliance, as a relatively large fossil fuel user, the capital costs of making the inevitable conversion from coal-fired energy to electricity and biomass, under planned ETS rules, will be about $63 million. Converting smaller gas and diesel boilers will add $7m, with the process being done over 10 years.
Alliance isn’t exploring the possibility of buying forests to keep its coal-fired processes.
But operational expenses will increase significantly, by about $5.5m a year, based on current energy prices.
“These are significant costs for a farmer-owned business with marginal profitability,” Surveyor said.
“These issues would be reflected across the red meat sector.”
At the North Canterbury shareholder roadshow meeting Surveyor said the three largest meat companies that release their annual results have combined revenue of $5.8 billion a year but in all case, earnings don’t match their cost of capital.
Dannevirke is one of two North Island plants operated by Alliance, along with Levin, and the co-operative has signalled interest in further northern expansion though Taggart said the idea should not be overplayed.
“We believe every farmer needs the opportunity to supply a co-operative but our priority is to maximise our returns for existing shareholders. We’re not losing any sleep over it.”
No options for acquisition or new development are being ruled out but Alliance will be interested if someone is exiting a North Island plant and if the price is sensible.
Alliance wants to boost it beef processing market share.
