New targets will force farmers to reduce their emissions in order to sell to export markets in a bid to future-proof the sector, the government has announced.
Agriculture Minister Damien O'Connor announced the government's final plan to reduce agricultural emissions today, after a five-year process that involved working with farming leaders.
It will see a system introduced to measure and price emissions at a farm level - with mandatory reporting to begin next year.
O'Connor said the decisions announced today set out a path to give farmers certainty and addresses the ever-strengthening market signals from overseas on climate.
He said future export growth of food and fibre products will depend on farmers demonstrating their sustainability credentials.
"Nestle, the single biggest customer of our biggest company Fonterra, has committed to a 50 percent reduction of scopes 1, 2 and 3 emissions by 2030. Many more companies have similar targets. This is a tectonic shift in our export markets, meaning our farmers will have to reduce their emissions in order to sell to them."
O'Connor said many other companies have similar targets.
"The reality is, government-required or not, our agriculture sector will have to adapt over the coming years and reduce emissions.
"It's a fact of business in the 21st Century, but with the support of government, we can make that transition in a pragmatic way with the sector."
Work is also underway to allow scientifically validated forms of on-farm sequestration into the Emissions Trading Scheme to help reduce the cost to farmers.
O'Connor said the plan supports farmers' transition, helps secure their future export growth, and works alongside other climate policies to continue reducing emissions.
Farm-level emissions reporting requirements will come into effect in the last quarter of 2024, with emissions pricing to begin two years from now in the last quarter of 2025.
The government is also proposing deferring the legislated farm level reporting requirements in the Climate Change Response Act (2022) CCRA.
"Currently farmers would be required to register in the NZ ETS and monitor emissions from 1 January 2024, unless the law is changed," O'Connor said.
"We're proposing an Order in Council be approved, prior to 1 January 2024, to defer those provisions and public feedback is being sought on the proposal over the next few weeks.
"We believe it's crucial that work continues with the sector and Māori on the development and implementation of an alternative pricing system that's fit for purpose."
Public consultation begins today and ends on 6 September 2023.
- $300 million over four years through Budget 2022 to go towards new tools and technology to reduce on-farm emissions to farmers quicker and provide on-the-ground support to adapt.
- $54m into the first projects through the Centre for Climate Action on Agricultural Emissions to bring down emissions.
- $15.4m from Budget 2023 to develop a system to enable farmers and their advisers to calculate and report agricultural emissions.
'Last thing country needs' - Federated Farmers
Federated Farmers is concerned the government's final plan to force farmers to reduce agricultural emissions will put some out of business.
Its president Wayne Langford said farmers are already struggling and the added burden of tracking emissions will lead to a 20 percent drop in sheep and beef farming, and a five percent drop in dairy production.
"That's the last thing the country needs in our current economic climate, and is not something Federated Farmers would ever be willing to support."
Langford said farmer confidence is at an all-time low.
"The announcement made this afternoon is completely tone-deaf to the reality rural New Zealanders are living with.
"At a time when farmers are struggling to keep their heads above water and are looking for support, they're instead being weighed down with more uncertainty, complexity, and cost."
Farmers are grappling with falling prices - fetching 25 percent less for lamb compared with a year ago, and a steep drop in the milk price from $9.30 to a forecast $6.75.
Langford said Federated Farmers had put a plan forward to reduce emissions in the way that is cost effective and fair for farmers.
"The sector presented a credible plan 18 months ago, but we had nothing but radio silence from government who have now compressed timelines and put themselves under pressure.
"What the government have come back with is not a plan that's been designed in partnership with the sector - it's the government plan and we have serious concerns about the impact it will have on New Zealand farmers."
Announcement 'falls short' - Green Party
The Green Party said the government's announcement for pricing agriculture emissions "falls short" and only it has a plan to "reduce agricultural emissions at the scale and pace needed".
Green Party co-leader James Shaw said: "The Labour Cabinet's emissions pricing plan leaves too much to chance. People deserve a plan that will work - and with a strong hand in the next government, the Green Party will make it happen.
"We need an enduring cap on total emissions that reduces over time. That is the only way we will be able to cut pollution in line with what science tells us. We can start immediately by reducing reliance on the things that fuel emissions-intensive farming, like nitrogen fertiliser and imported supplementary feed."
In his role as Minister of Climate Change, Shaw said he had made it clear to the government why he did not support its plan.
He did however, agree with Cabinet's decision to develop a standardised way of measuring on-farm emissions.
"I also strongly support the decision to recognise carbon sequestration from things like wetlands and small-scale planting in the Emissions Trading Scheme, rather than in a parallel levy system."
Green Party agriculture spokesperson Teanau Tuiono said New Zealand could have a "thriving, sustainable" farming sector that supports rural communities and tackles climate change.
"This year's election is a critical moment that will shape the future of farming for decades to come. A decision to take the least action possible is not good enough.
"Our children deserve action that meets the scale of the crisis and ensures agricultural emissions actually reduce in line with the Zero Carbon Act targets. Anything less than this is too little, too late.
"Dealing with agricultural emissions is a challenge that has defeated successive governments for decades. We cannot leave another generation to inherit the burden of slow progress."