12 Sep 2017

Carbon tax not fair on farmers - professor

2:38 pm on 12 September 2017

Charging farmers for carbon emissions would stall the economy and make local farmers uncompetitive in the world market, a Lincoln University professor warns.

FOR WATER TAX story - Generic cow

A polluter-pays system is good in theory, but not in practice, a Lincoln University professor says. Photo: RNZ / Rebekah Parsons-King

The Green Party has announced it would replace the emissions trading scheme with the Kiwi Climate Fund, put a charge on all climate pollution, and use the revenue to fund tree planting around the country.

Party leader James Shaw said he estimated that by 2020 the charge on carbon dioxide would be around $40 per tonne, $6 per tonne for nitrous oxide and $3 per tonne for methane emissions from agriculture.

A Lincoln University professor of animal breeding and genetics, John Hickford, said a polluter-pays system was a good idea in theory.

However, he said it becomes complex and unfair when the emissions pricing was calculated domestically and most of New Zealand's produce was exported.

"We sell most of our agricultural products overseas and that's where the issue of fairness becomes complex because it may not be fair to them as they trade internationally," Prof Hickford said.

"They may be trying to put goods into a country where they don't tax greenhouse gas production, or they may subsidise agriculture production, and we've got to go out there as a very small player in world agriculture production and try to compete with highly subsidised producers elsewhere."

Mr Shaw said that global demand for low-emission food and fibre was going to boom and New Zealand farmers have the potential to be world leaders in sustainable farming.

When that boom occurs, New Zealand farmers would be able to meet the demand, Prof Hickford said.

"If [demand] was booming then we could play the game.

"But do we want to be first out of the blocks on this and at the expense of our farmers?"

New Zealand businesses selling products offshore were hugely profitable in terms of cash flow earnings versus expenses, which was flowing back into the economy, he said.

But he warned a policy like the Kiwi Climate Fund would cripple businesses on a farm-by-farm basis.

"Especially for sheep and beef farmers at the moment, they aren't making a lot of money. So you're just going to add another cost on them and expect them to compete against highly subsidised markets."

Get the RNZ app

for ad-free news and current affairs