By Macaulay Jones, Federated Farmers Trade and Climate Change Senior Policy Advisor
The primary sector has delivered its He Waka Eke Noa Emissions Pricing Recommendation report to Ministers, now it’s time for the Government and Minister O’Connor to deliver on their end of the bargain.
In a 2020 public webinar hosted by The New Zealand Agricultural Greenhouse Gas Research Centre titled ‘Setting the direction: Towards a low-emissions future, Minister Damien O’Connor spoke about the need for agricultural emissions pricing and stated:
“ In negotiating a trade agreement with the EU, and with the UK, both of those places are very proud of the efforts around climate change and emissions reduction.
“If we can say we’ve included agriculture (in the ETS), that gives us momentum when it comes to negotiating that market agreement and so don’t underestimate the positives of this. While there may be some, you know, adjustments that are needed I think ws ce could innovate our way through that. But, the positives are what we are looking at by the inclusion of Agriculture and the ETS.”
In the two years since Minister O’Connor gave this address, New Zealand has signed a comprehensive and ambitious free trade agreement (FTA) with the UK. This trade outcome with the UK is excellent and will benefit New Zealand farmers going forward.
However, this trade outcome with the UK was shared with Australia, who managed to sign a comprehensive and ambitious FTA months before New Zealand despite not pricing agricultural emissions. Not only does Australia not currently price agricultural, or any, greenhouse gas emissions, in the 2022 Federal election neither the Liberal-National Coalition nor Labour campaigned with a policy to price agricultural emissions.
The first round of formal negotiations between New Zealand and the EU were held in July 2018 and negotiators undertook the twelfth round in March 2022.
Worryingly, as part of FTA negotiations with New Zealand, the EU is proposing to restrict the use of common cheese names such as feta, Gruyère, and Parmesan under the pretence of protecting ‘Geographic Indications’ (GIs). In our submission on the matter, Federated Farmers warned that the EUs proposed GI framework would undermine the New Zealand dairy sector’s efforts to focus on ‘value’ exports.
The He Waka Eke Noa Pricing Recommendation report stated that:
“Modelling estimates that a farm-level split gas levy will result in a fall in production of milk of 1.4% and meat of 0.1%. This is the lower of the impacts discussed during consultation. Analysis identified that there is an emissions leakage risk for milk, beef and sheep meat associated production decreases.“
New Zealand farming organisations are making the best of an emission pricing political ultimatum and demonstrating genuine international leadership. Despite independent analysis making it clear that an emissions price is likely to lead to a drop in New Zealand food production, and independent analysis making it clear that a drop in food production is likely to lead to an increase in global emissions, the industry delivered on a promise of an emission pricing recommendation’s report in full and on time.
It’s now time for Minister O’Connor and the New Zealand Government to deliver on promises that costly policies such as He Waka Eke Noa, will deliver trade outcomes with major economies such as the EU. New Zealand farmers are, quite literally, banking on it.
New Zealand’s two-way trade with the European Union is worth $16.5 billion per year. As a representative of the only country in the world to plan on pricing agricultural emissions, we eagerly await Minister O’Connor delivering a comprehensive and ambitious EU FTA without signing up to an overreaching GI framework.
Going forward Federated Farmers are concerned about the negative social, economic and environmental impacts pricing agricultural emissions from the most climate efficient food producer in the world risks causing. However, we are taking the Minister at his word and not underestimating the positive impacts that await either.