A report by the Biological Emissions Reference Group (Berg) highlights the grim reality that livestock farmers will need new technology or might be forced to leave the industry if agriculture is required to fund the cost of its emissions in the ETS.
That new technology might include genetically engineered products such as High Metabolisable Energy ryegrass being developed by AgResearch and vaccines and inhibitors as well as requiring grazing land to be converted to horticulture or forestry.
Adopting known mitigation measures will reduce livestock emissions by 10% but with calls for farming to be included in the ETS livestock farming will be unviable for many if there is no major technology breakthrough and emission prices rise to $30 a carbon tonne equivalent.
Berg member and Federated Farmers national vice president Andrew Hoggard cited research showing a small reduction in short-lived methane gas emissions does not generate more global warming.
Setting different reduction targets to reflect the longevity and impact of different gases could help livestock farmers remain viable.
People have to eat so decimating NZ’s livestock farming and encouraging production in less efficient countries is not an option, he said.
The report said a combination of on-farm mitigation, land use change and technology will reduce agricultural greenhouse gas emissions.
A model in the report used emission trading prices of $28.73 a carbon equivalent tonne and $191.54.
It showed farms that introduce mitigation such as changes to fertiliser and supplementary feed, lower stocking rates, changes to livestock mix, switching to once-a-day milking and planting 20% of its area in trees will still fail to meet targets of a 30% reduction in emissions by 2030 and 50% by 2050.
Even lower targets of 15% by 2030 and 25% by 2050 will cause a significant decrease in profitability.
The ETS pricing models showed a drop in dairy sector profits of between 7% and 70% by 2030 and 11% and 98% in 2050.
It was worse for sheep and beef with profit drops of 9% to 89% in 2030 and 15% to 123% by 2050.
“Farmers may change land uses or exit the industry during prolonged periods of negative or low profits. The analysis did not consider this option.”
Losses to the wider economy from livestock farming would be offset by revenue from forestry and, to a lesser extent, horticulture.
Such land use change is needed to meet emission targets but the report noted greater incentives will encourage forestry planting.
“It’s reasonable to expect significant change in how we use our land in the next 30 years. This is not new. We’ve seen major changes in our land use in the past.”
The report also looked at output and employment and warned large employment and migration effects will be felt in some isolated livestock farming communities but higher land values and employment in areas of horticulture expansion.
“The output of all agricultural sector contracts as a result of emissions being priced. Employment decreases in all pastoral agriculture sectors, especially under the highest emission price in 2050. In contrast, the forestry industry experiences modest growth.”
The models showed forestry jobs would expand by 0.2 to 1.9% with falls in employment in the other sectors of between 0.7% and 10.4%.
An unknown is the degree technology not yet available or proven could temper the impact on livestock farming.
“Continuing funding for research into new technologies is really important as these technologies offer a lot of potential benefits for farmers and NZ Inc.
“However, we cannot rely on making these breakthroughs because the science is so complex,” the report warned.
