Climate change: Farmers can afford the ETS

Written By: - Date published: 8:52 am, May 25th, 2011 - 45 comments
Categories: ETS, farming - Tags: ,

Reprinted from No Right Turn:

Climate change: Farmers can afford the ETS

Phil Goff’s announcement over the weekend that agriculture will be brought into the ETS has met with the usual response from farmers: whining. They can’t afford it. It will bankrupt them. We should “revere” them as the backbone of the country (and no doubt offer them rows of nubile young sheep into the bargain). So, how much would it actually cost them?

2.5 cents per kg of milk solids, according to the Ministry for the Environment [PDF, p. 4]. Compare that to their expected payout this year of over $8 per kilo, and you can see that they’re bullshitting us. They can afford it; its just that they’d rather shirk their responsibility and force us to pay in their place.

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In related news, Phil Goff reported that Fonterra CEO Andrew Ferrier told him there would be no increased cost to consumers from agriculture coming into the ETS. When given the chance on camera to deny that, Ferrier declined. He wouldn’t confirm it either, because it would kill agriculture’s excuse-making.

Fed Farmers’ head Don Nicholson, meanwhile, says we should “revere” farmers and stop asking them to pay for a fraction of their greenhouse emissions, or stop polluting our rivers, or pay their damn taxes like the rest of us have to.

45 comments on “Climate change: Farmers can afford the ETS”

  1. vto 1

    Look, business does not do what it does not have to. It plays by the rules in play. And does its best to bend the rules and get them changed to suit. It is brutal but that is it.

    The only way to get these bludgers to stop demanding rural welfare is to change the rules on them.

    btw, got a link for the typically ignorant Don Nicholson comment?

    • Draco T Bastard 1.1

      Not quite what you’re looking for but he does get around to saying that farmers want to pay taxes on gross profit like PAYE people. After telling us that he wants farmers to be able to right off expenses, you know, unlike PAYE people who get to pay tax on their gross income.

  2. marsman 2

    Farmers are fouling our waterways, they should be forced to stop doing so immediately and should pay to have them cleaned up. They should also pay for their share of whatever other pollution they create. They have been subsidized by the taxpayer for far too long. Welfare for business has to stop!

  3. 2.5c a kg of milk solid???????
     
    The way they have been carrying on you would think we wanted them to surrender their first born.
     
    It is like the fart tax fiasco where a $12m levy to put into research for reducing animal ruminations almost caused a riot.
     
    Farmers really do need to change their mind set and realise they are part of a community and there are benefits in acting collectively.  Like having gold plated roads running outside their farms, marketing, trade agreements …
     

  4. ianmac 4

    David Ferrier did state on Campbell Live that milk prices were set by overseas markets. See Red Alert:
    http://blog.labour.org.nz/index.php/2011/05/24/who-knows-better-fonterra-or-key-on-setting-dairy-prices/

    • Lanthanide 4.1

      It’s true, but no one has asked him how the international price is actually mechanically translated back into NZ price.
       
      It seems to me like the price we pay on the shelves hasn’t changed more in line with the milk solids price, than it actually has changed with the NZ $.
       
      In other words, when the NZ $ goes up, how come the milk price on the shelves doesn’t go down?
       
      It reminds me of Microsoft. They have a fixed currency conversion for selling their enterprise software to distributors in NZ. This currency conversion cost ignores the NZ dollar. When the NZ dollar goes over about 70 US cents, it is cheaper for companies in NZ to simply buy the software from retailers/distributors in the US. Meanwhile the distributors in NZ have a hard time actually selling it because it’s more expensive than what people can otherwise buy it for online from overseas, but their contracts with Microsoft specify that they must buy all software direct from Microsoft and no one else. Stuck between a rock and a hard place.

      • Blighty 4.1.1

        they probably use their NZ price as a bit of a hedge by pricing it against a constant exchange rate.

    • Herodotus 4.2

      You are being played here by Fonterra and co. Sure the raw material input I accept is based on international pricing. But the wholesale price of the finished product and pricing to the end consumer is not, that will depend on the likes of volume, market position, brand worth and value the brand can extract out in pricing, competition, product substitution, price elasticity and many other variables. From these links all I see is that Fonterra is a cost + coy. If that is the case they should be assigned with the likes of the Dodo
      How was Fonterra able in Feb to freeze their prices? Did they know or believe that prices had hit a ceiling and that there were now just “doing good PR”, was there resistence by the consumer by purchasing less, they were willing to take a minimal risk and forgo a few $ profit should the price of dairy continue to increase? I also note (no links sory) that there was reported that Fonterra had increased its prices just before the freeze and that these price increases were working their way through the system this was given from memory as to why we the consumer were still experiencing price increases after Feb 11.

  5. Jen 5

    And shame on Simon Mercep this morning for letting Fed Farmers spin him that outrageous line that farmers are already in part of the ETS through power prices and the like. He needs to man up if he wants to play with the big boys.

    • Lanthanide 5.1

      The reader emails that they read out made this point several times, which was good.

  6. GP 6

    I’d love to hear you guys tell this to sheep and beef farmers.

    They are the ones that are going to get screwed by this, not dairy farmers. While prices are high at the moment, many have come off years of poor returns and drought meaning most of the income they will get this year will be used to pay off debt and I doubt there will be much income left over. Their input costs, such as fuel and fertiliser are also increasing meaning margins are still tight and while there are a few things farmers with cattle can do stop emissions, there is still nothing available for farmers with sheep to mitigate their emissions.

    It could also threaten our export markets as it would lead to a drop in production, meaning we would be unable to fill up our quotas, particularly in Europe.

    Oh, and one other thing, while Key is wrong about dairy prices rising, the prices consumers pay for meat will skyrocket as these guys will have no choice but to pass their added costs onto consumers.

    • vto 6.1

      Such farming is clearly not profitable then and the land should be vacated.

      Why do they continue to flog a dead horse?

    • vto 6.2

      Also, there has been no drought. “Drought” as described by the farming sector is their own definition based on farming in a manner which is entirely unsuitable for the place they farm. It is not an actual drought. It is their own foolishness in relying on unreliable rainfall.

      In addition, if they hadn’t exposed the soil to the harsh sun and wind, and not burnt off the bush cover, there would be no problem of dry soil.

      These problems are entirely of their own making.

      • Colonial Viper 6.2.1

        +1

        Just like sheep farmers lambing earlier and earlier in the year to get better prices, and then bleating when a snow storm kills half their stock.

    • wtl 6.3

      If you look at the PDF, you will see the estimate costs for meat farmers as well:

      – around 6 cents per kg of sheepmeat
      – around 3 cents per kg of beef
      – around 6 cents per kilogram of venison

      These numbers sound pretty low to me.

  7. vto 7

    If you listened to Don Nicholson (shallow dimwit head of Fed Farmers) you would think that the New Zealand farmer invented farming.

    And invented food.

    And even invented eating.

    You would think that without the New Zealand farmer we would all shrivel up and die.

    This is his thinking. And he represents the most farmers. This is the mindset.

    It is quite mind-boggling.

    • Colonial Viper 7.1

      Less than half of farmers are members of Federated Farmers. There are smart farmers out there who can see exactly what is going on. But in small rural communities they are not going to stick their necks out to say it out loud. They are there however.

      • Bored 7.1.1

        Well spotted, CV that less than half of farmers belong to Feds….my experience years back was that the farmers who worked for extra cash at the freezing works were the loudest unionists when it came to the wage round. Back on the farm they joined another Union to get the best returns…Federated Farmers. Hypocrites want everybody else to do individual wage bargaining.

  8. GP 8

    VTO, that is such and offensive, ignorant statement.
    It would take me too long to write a rebuttal. So I’ll simply say this:
    This policy is threatening an $8 billion industry and also, if you think our farmers are inefficient and unprofitable, go overseas and see how they farm in China where there is no such thing as a resource consent, or Europe and the US where they have subsidies.
    Our sheep farmers are the best in the world. Anyway I have to get to work.

    • Colonial Viper 8.1

      No seriously, if farming is not profitable, farmers should give their land up and let other people take it over.

      That’s what the free market says should happen. Failing marginal industries should be allowed to fail and be marginal.

      Unless of course it’s just PR from Federated Farmers, and they do benefit more (much more) from their $700,000 payouts from Fonterra than their income tax returns might indicate.

    • vto 8.2

      Intresting that you find it offensive. Why is that?

      “This policy is threatening an $8 billion industry and also, if you think our farmers are inefficient and unprofitable, go overseas and see how they farm in China where there is no such thing as a resource consent, or Europe and the US where they have subsidies.
      Our sheep farmers are the best in the world. ”

      I looked at your post and answered simply and clearly.

      I don’t know if sheep and beef farmers are unprofitable, that is their own admission (and effectively yours too). Recently too. I will ask the simple question again – if it is unprofitable then why do they continue?

      What does China and USA have to do with this?

      You claim they are the best in thw world in one breath and in the next claim that they struggle to make a profit…. what the fuck? it is one or the other. shheeeeessshhhh, maybe some basic business lessons wouldn’t go astray.

      Instead of getting heated up (like happens EVERY time this conversation is had with rural folk) how about objectively answering the issues.

      Go on.

    • This policy is threatening an $8 billion industry.”

      Given that the estimates seem to be talking at the level of a few cents per kilo of milk solids, beef, venison, etc. and, given the prices received per kilo of these commodities by farmers, your statement implies that any reduction (at all) in prices received would send the industry to the wall. Yet, received prices have been lower than current prices so how come the industry hasn’t been destroyed?

      Also, the talk from farmers is usually that the world will always need their commodities and that demand is growing. That would surely mean that they are capable of paying what all other industries are being forced to pay even though those other industries may not have so secure a future, in terms of demand.

      The argument that agriculture should be left out of the ETS makes no sense. Am I missing something?

      • vto 8.3.1

        Well put Mr Puddle.

        Come on GP, please give us your accurate assessment of these issues.

        It would help immensely if such accurate assessments are put into the public arena for consideration. Unfortunately it seems that never happens. Which creates doubt of course.

        Not being smart. I would genuinely like to hear it.

        I am all ears… over to you (or someone similar)

  9. Tom Gould 9

    It’s been like a walk down memory lane. It must be 25 years since I heard that characteristic high pitched whine coming from the rural sector, the one triggered when they have their absolute privileged right to subsidies questioned. And it is getting louder.

  10. ianmac 10

    When I have talked to farmers they rightly say that their industry is the backbone and they hope I appreciate that fact. Yes I do. But I suggest to them that they are not farming for the good of NZ. They are farming because the know about it, and because they like the lifestyle, and because they get a good income from their work.
    So, if a particular action is good for their backbone and good for NZ will they do it? Emissions for example and a fart tax for another.

    • vto 10.1

      ianmac, good time to ask the question – what do they actually mean by the backbone?

      And how do they figure that they are the sole component of that backbone? as one example, how good would NZ farming do if no farmers had been taught how to read or write? Does that make teachers the backbone of the backbone??

      And what about the domestic housing sector? How well would NZ farming do if farmers had no house to sleep in at night? Another backbone of the backbone..

      Or the solicitors who look after the port facility contracts without which there would be no ability to export? Another backbone backbone..

      Or the urban wage and salary taxpayers, who as we all know now are the ones that pay the tax to pay for the rural roads and the rural health services and etc?? Another backbone of the backbone.

      So what do they mean??

      • PeteG 10.1.1

        More like the guts than the backbone? Farmers supply the guts of the country.

        As the saying goes, if you don’t eat you don’t shit, and if you don’t shit you die.

        • Colonial Viper 10.1.1.1

          As the saying goes, if you don’t eat you don’t shit, and if you don’t shit you die.

          Hmmmmm. Then maybe NZ farmers should be making it easier for NZ’ers to eat affordable food, instead of pricing their produce for wealthy international markets.

        • vto 10.1.1.2

          yea good one. Do you think we need farmers for our food??? How did humans eat before farming camle along??

          If ya dont sleep under cover at night you die too.

          If ya dont get medical help when sick you die too.

          If ya dont dress warmly you die too.

          ffs peteg your posts are hopelessly useless. Try some thought first.

          • PeteG 10.1.1.2.1

            You could try your own advice.

            Do you think we need farmers for our food??? How did humans eat before farming camle along??

            Two wee things have changed:
            – the population has increased heapsfold and most people don’t have enough land
            – many people hardly know how to cook let alone produce food now

            • vto 10.1.1.2.1.1

              such a silly ding dong.

              NZ has 4 million people and is capable of growing food for, I dunno, maybe 100million people. So what on earth are you on about?

              And yes preparing food for eating is indeed very difficult you are right. I just leave you to it and hopefully someone else can provide some decent feedback in relation to the various questions above.

              • Colonial Viper

                Sad that in a land full of milk and lamb, so many New Zealanders cannot afford to put milk and lamb on the dinner table.

                • grumpy

                  France has a law limiting the price of wine on the domestic market. That is so the average Frenchie can afford to buy good wine……….

            • Armchair Critic 10.1.1.2.1.2

              It takes about 10m2 to feed a person with a healthy (although kinda boring) diet for a year. For the 4 million people in NZ, that’s 400sq.km. By contrast, the country has a total area of 268,000 sq.km.
              Large scale farming operations have not been developed by farmers alone. They’ve relied on:
              – huge irrigation schemes, built by others, and
              – transport companies, to get them supplies (fertiliser, seeds, feed etc.) and to take away their produce to market, wherever that market may be.
              – oil companies, which provide the fuel for their machinery and are an essential ingredient in fertiliser, and in the aforementioned transportation,
              – government, (that’s a proxy for “the rest of us”) to give them a hand when their crops fail e.g. when their land is ruined by flooding.
              – government, again, to provide the routes along which the transport companies operate
              – you may also wish to consider the relationship between dairy farming and the development of hydroelectricity and the national electricity grid before you carry on with your “Farmers = Atlas” argument. It’s coming across as contradictory and one-dimensional.
              – finally, farmers need their customers, which is very much the side of the coin that you have been ignoring.
              What it’s all pointing to is that we are all very much dependent on others.
              Farmers are an important and valued part of society, but they are no more important or valued than other parts. Putting themselves on a pedestal and proclaiming that they are better, while wilfully ignoring their flaws is pure arrogance. It is also very disrespectful to the large group of people who help farmers do the good things that farmers do.

              • PeteG

                It takes about 10m2 to feed a person with a healthy (although kinda boring) diet for a year.

                Interesting. If that’s the case then most people in NZ should be able to provide all their own food. Maybe food banks should hand out seeds with every food parcel so they won’t need to be back next year.

                Putting themselves on a pedestal and proclaiming that they are better, while wilfully ignoring their flaws is pure arrogance.

                I’m not sure how much this happens, farmers I know tend to be fairly down to earth people.

                • MrSmith

                  “farmers I know tend to be fairly down to earth people.”
                   
                  PeteG, They are also the most miserable, out of touch, bunch of beneficiaries I have ever met.
                   
                  And before you say it, I know and have worked for plenty of farmers, they are business men thats all, we owe them nothing!

                • Armchair Critic

                  Maybe food banks should hand out seeds with every food parcel so they won’t need to be back next year.
                  It’s not that easy. People who tend to need foodbanks tend also to have a less secure relationship with their land. In other words, they are tenants and their lifestyle (poorly paid jobs with little job security – 90 day trial and all that, for example) requires them to move at relatively short notice. This is a strong disincentive to plant and tend a garden.
                  I’m not sure how much this happens, farmers I know tend to be fairly down to earth people.
                  I am sure. Various talking heads from FF get on TV, the radio and into the papers, then wannabe cheerleaders pick up the FF memes and repeat them, ad nauseum, on the internet.

              • Draco T Bastard

                How much land to feed one person?

                The minimum amount of agricultural land necessary for sustainable food security, with a diversified diet similar to those of North America and Western Europe (hence including meat), is 0.5 of a hectare per person. This does not allow for any land degradation such as soil erosion, and it assumes adequate water supplies.

                10m2? Not bloody likely.

                • Colonial Viper

                  Indeed. 0.5ha = 5000m2 for those non-farmers amongst us.

                  That’s just a bit bigger than a piece of land 3.25m x 3.25m.

                • Armchair Critic

                  10m2? Not bloody likely
                  I have a 40m2 garden to feed five people. It provides enough so that we only need non-seasonal vegetables.
                  There are some times, when I have not planned my planting properly, when we would starve if we had to rely on the garden. Conversely there are times when we have so much being produced I have to give stuff away, or compost it.
                  I’m expanding it to about 100m2, because I want to plant potatoes and kumara, because I want to be sure I always have too much of every vegetable, and because I have the room.
                  In short – I’m speaking from years of practical experience. How big is your garden?
                  Also, I acknowledge that the garden does not produce eggs, meat, milk, cheese, sugar, or essentials, like coffee and chocolate.
                  Producing meat requires a lot of land, and I expect you will find that that accounts for much of the 4,990m2 difference between your figure and mine.

                  • Draco T Bastard

                    Wish I could have found the article I read a few years ago. That one actually pointed out that you needed 1.5ha (AFAIK, there isn’t a precisely determined amount but educated guesses). Not so much in growing area but in natural support systems – water (catchment/cleaning), composting, air cleaning etc etc.

                    You can grow enough in 10m@ but could you do it without the car, artificial fertilisers*, water pumped from far away?

                    Yes, I noticed you do composting but did you count that area in your growing area?

                    • Armchair Critic

                      Personally:
                      It all comes back to maximising utility – the roof is used to keep us dry and to provide us water. All the water is recycled, from washing the dishes, running the washing machine and even old water than cats and dogs didn’t drink. It’s all off the roof, no groundwater or water from a stream, and it gets to the garden by gravity.
                      I compost on the unused parts of the garden beds and don’t count that in the food-producing area. I also compost separately. People who want some compost (I have too much) are welcome.
                      The car gets used to get me to town to get seeds, and things to kill creepy-crawlies. Though I understand rhubarb leaves make great bug killer. I don’t need fertiliser. If I lived in town and could walk to get seeds, or if I kept more seed from my garden I’d have less of a need for a car for gardening.
                      And it’s true, we would all be skinny if we had to rely solely on the garden. But we wouldn’t be dead.

  11. Sunny 11

    When Fonterra was in the spotlight over its involvement with the Chinese company that poisoned baby milk I believe it offerred to build a children’s hospital. This was, if I recall correctly, instead of paying compensation to the families of the sick, dying and poisoned babies. Wonder how that’s going..how about MSM ask Fonterra sometime? Now would be good.

  12. Tanz 12

    Talk about biting the hand that feeds. Farmers take a huge risk and are being picked on, again. Ridiculous. They need all the support and help they can get, and deserve it.

    Topsy turvy world.

    • ZeeBop 12.1

      Says the debt junkie.

      When a farm pollutes the waterway, the town that takes drink water has to pay more
      to clean the water.

      When farmers take on too much debt and taxpayers subsidies their pollution then
      that tax money does not go on services to taxpayers.

      There is a problem in the NZ economy, its private debt levels, its far to rewarding
      to exporters to carry debt. Why? Because they avoid paying tax.

      If we produce milk, surely as a country we should be able to afford the milk,
      if taxpayers can’t afford milk why should taxpayer subsidies milk production?

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