Saturday, March 30, 2024

DairyNZ slams farm tax proposals

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All of New Zealand’s 12,000 dairy farms face an average $18,000-a-year additional taxes under the carbon and nitrogen taxes proposed by the Green Party, DairyNZ has calculated.
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Add in the Labour Party’s proposed water tax and those 2000 farms that also irrigate face more than three times the impost, an average of $63,000 per farm.

DairyNZ chief executive Tim Mackle said details on the proposed new taxes were sketchy, but his economists used what was available from Labour and the Greens to come up with the figures.

“The tax trifecta would severely reduce dairy farm profitability, and possibly require additional borrowing for some farmers to meet expenditure,” he said.

“It would impact the success of our rural economy, and put at stake the livelihood of our rural communities.”

The carbon tax has been estimated to cost each farm $6850 annually, the nitrogen tax $11,232, and the water tax an average of $45,000 for those farms irrigating.

Mackle said if a political party had asked him what the dairy sector wanted from government, he would’ve replied an economy-wide plan outlining the emission reduction expectations for each sector over the longer term.

“Targeting farmers this severely and swiftly does little to incentivise mitigation, and ignores the hard work farmers have been voluntarily doing themselves to lessen emissions.

“Dairy farmers have been operating in a climate of uncertainty, with no indication of when they would be faced with a charge for agricultural emissions.

“Despite this, we have put the Dairy Action for Climate Change plan in place so that all farmers now know what they can be doing right now to reduce their carbon emissions.”

Mackle said that Green Party leader James Shaw welcomed the climate change plan when it was announced in June.

“He’s well-aware of the work currently under way. However, what might be a surprise to him is that we support the concept of a climate commission, and the idea of clear carbon budgets so the dairy sector can plan for the future.”

The Dairy Action for Climate Change plan was in partnership with Fonterra, and had the support of the Ministry for the Environment and the Ministry for Primary Industries.

Mackle drew attention to the work of the Biological Emissions Reference Group (BERG), a joint sector and government reference group.

Its purpose was to build robust and agreed evidence on what farmers and orchardists could do to reduce emissions, and to assess the costs and opportunities of doing so.

BERG’s final report was due later this year, and would be vital in informing future policy development on agricultural emissions.

NZ was acknowledged as a world-leader for efficiently producing milk on a greenhouse gas-per-unit-of-milk basis, as reported by the United Nations’ Food and Agriculture Organisation.

“And we’re committed to doing even better but it must be understood by everyone, including the government of the day, that climate change is too complicated for each sector to attempt to address on its own,” Mackle said.

DairyNZ senior economist Matthew Newman said the effect of the Green Party’s carbon tax would be $82 million annually, something the party had underestimated.

The direct cost of the tax to dairy farmers would be $67m, but that excluded the administrative costs and the likely increase in the costs of fuel, electricity and other inputs to farming.

With the Greens proposed tax on carbon dioxide, fuel and electricity prices were expected to increase for all New Zealanders, including dairy farmers.

The Greens also proposed that a nitrogen pollution tax would be deducted from the milk payments by dairy companies.

That wouldn’t incentivise farmers to reduce their environmental footprint but would reduce profitability, making it even more difficult for farmers to make onfarm changes. 

Newman added that for farmers to understand what they could do to reduce greenhouse gas emissions and nitrogen leaching, they needed a nutrient and climate farm management plan.

This might become compulsory under many regional councils.

The carbon tax and the nitrogen tax together would cost an average dairy farmer $18,000 a year, plus at least $2000 per year for an annual nutrient plan.

“If a farmer did have a spare $20,000, this could be used to plant a 1.9km riparian strip three-metres wide with 5700 native plants annually,” Newman said.

“This would contribute considerably more to improving our waterways than the proposed tax.”

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