New Zealand proposed taxing agricultural emissions, including methane emissions from cattle and sheep burps and nitrous oxide from synthetic nitrogen fertilisers and cattle dung and urine.
Farmers oppose the proposal, prompting them to organise a nationwide protest.
On 11 October 2022, New Zealand’s Prime Minister Jacinda Arndern unveiled the world’s first levy on GHG emissions from agriculture to tackle climate change.
The country has around 10 million cattle and 26 million sheep compared to its 5 million population. Half of its total emissions come from the agriculture sector.
In the past, agriculture emissions have been exempted from the country’s emissions trading scheme, but recently has come under more scrutiny.
New Zealand farmers react
Just nine days after the announcement, farmers across the country took to the streets to air their resistance to the proposed agriculture tax. Bryce McKenzie, a cofounder of Groundswell New Zealand, which organised the protest, said the tax threatened the viability of local farmers. In a press conference, McKenzie says that the proposed tax is the “worst assault on New Zealand farmers and rural communities in a generation” (Groundswell protest, 2022).
Farmers gathered brandishing signs that said the policy “stinks” and warned that the tax would make food more costly while putting their livelihoods at risk.
In Dunedin, one of the main cities in the south island, around six tractors gathered with signs that said: “stop strangling farmers” and “more regulations = less food” (Groundswell protest, 2022).
Newshub reports that South Island city mayors from Westland, Buller, Grey Districts and the West Coast Regional Council chair have stated support of the t the protest (Hewett et al., 2022).
The joint statement says, “We must protect our farming and rural communities at all costs. They are a vital contributor to our economy both regionally and nationally and are some of the most sustainable food producers in the world, having one of the lowest carbon footprints” (Hewett et al., 2022)
“The Government’s proposed tax emissions have the potential to create food scarcity and higher food prices with a significant volume of farmable land likely to be transferred to growing pine trees”, the statement reads.
Andrew Hoggard, president of the Federated Farmers lobby group, said the scheme would “rip the guts out of small-town New Zealand.”
Stuff news reports that New Zealand produces enough food to feed 40 million people, but its population is only 5 million (Hancock, 2021). Where does the rest of the food go, one may ask?
Based on 30 years of data, 95% of the country’s dairy it produces is exported to other countries, allowing it to earn nearly $16 billion in 2020 from export (Hancock, 2021).
Who gets the lion’s share of New Zealand’s quality meat and dairy products? China has been the country’s biggest consumer in recent years, receiving about a third of the country’s dairy products, the Stuff article says.
It also mentioned the following:
- Regarding beef, only 13% of its production is consumed locally.
- The rest goes to the United States, the country’s biggest buyer since 2010, followed closely by China.
- In 2019 China replaced the US at the top spot, which spent more than $1.6 billion on New Zealand beef.
- In 2020, however, the United States regained its position as the leading importer of the country’s beef.
According to the NZTE website, New Zealand is a world leader in food production and a top exporter, “providing millions of people in over 120 countries with premium food and beverage products, ” including dairy products, beef, lamb and venison (Food and Beverage, 2022). The website says that in 2021, New Zealand export was worth $31.2 billion.
Who benefits from the high prices of food in New Zealand?
NZ Herald’s article “Food, glorious food – but what a price” reports that the high prices of food such as milk, chicken and eggs are good news for the country’s farmers and the export economy but hard on Kiwi families (Food, glorious food, 2022).
Although it is the 8th largest milk producer, Kiwis are paying higher prices for milk than Australia, the United States, the UK, Singapore, France, Germany, and South Africa (About the NZ, n.d.)
Kiwis also pay higher prices for meat and dairy products than other developed countries. New Zealand had the fifth most-expensive food prices among 38 countries in the OECD (Mcilraith, 2022).
Mcilraith (2022) explains that the high prices result from two main factors:
- First, the lack of grocery competition in the market. The country’s supermarket sector has been a duopoly dominated by Foodstuffs and Woolworth. Only these two leading market brands control the food prices in New Zealand (Mcilraith, 2022).
- Second, the high price of food is blamed on the export price. “As a result, global markets set the price in New Zealand to make it profitable for local producers to sell their foods domestically”.
Katherine Rich, Food & Grocery Council chief executive, told Stuff that the supermarket duopoly, how much we export, and our position at the bottom of the world all hurt the receipt bottom line (Mcilraith, 2022).
“As our exports, particularly dairy products and meat, fetch higher prices (many of them are at record levels), so the pressure goes on we have to pay for them,” she said.
New Zealand’s proposed agriculture tax
There are more than five times as many sheep and twice as many cattle as people in New Zealand.
Livestock forms the backbone of the country’s large dairy and meat industries but contributes about half of its total emissions.
The methane is generated by the ruminants’ digestion and the use of synthetic nitrogen fertilisers in the grass they eat.
The plan to tax farmers over GHG emissions was introduced 20 years ago under prime minister Helen Clark. It was dubbed the “fart tax” by the opposition, and after a tractor protest outside the parliament, the proposal was shelved.
This year, Prime Minister Jacinda Ardern, and three of her ministers, unveiled the government’s plan for putting a price on the climate cost of farming.
Ardern says, “The proposal, as it stands, means New Zealand’s farmers are set to be the first in the world to reduce agricultural emissions,” said Ardern, adding that it would give the country’s biggest export market (worth $46.4bn a year) a competitive advantage globally while putting the country on track to meet its 2030 methane reduction target.
The proposed agriculture tax will see farmers who meet the threshold for herd size and fertiliser use pay a levy by 2025.
The tax is designed to change farming practices to meet the country’s methane target cuts of 10% by 2030 from its 2017 levels and its net zero emission target for 2050.
The government stated that the revenues would go towards new technology, research and incentive payments to farmers who adopt climate-friendly practices.
According to the NZ Ministry for the Environment, nearly half of the country’s GHG emissions come from agriculture. Methane emissions make up 75% of all agriculture emissions, followed by nitrous oxide from synthetic nitrogen fertilisers.
At the opening of COP27 this week, UN General Secretary Antonio Guterres says that the deadly impact of climate change is here and now.
Guterres urged developed and developing countries to “bend the emissions curve” and transition to cleaner and sustainable systems, with developed countries leading the way within these decades; otherwise, our planet will be doomed to cross the tipping points that will make climate chaos irreversible.
He calls for taxing GHG emitters like fossil fuel companies, who have profited long enough at the expense of the environment, and redirecting these revenues to those struggling with high food prices and rising energy prices.
Groundswell protest: Farmers oppose emissions pricing scheme. (2022 22 October). RNZ. Retrieved https://www.rnz.co.nz/news/national/477025/groundswell-protest-farmers-oppose-emissions-pricing-scheme
Hewett, W., Quinlivan, M., Swift, M., & Cook, A. (2022, 20 October). As it happened: Farmers take to streets in nationwide Groundswell protest. Newshub. Retrieved from https://www.newshub.co.nz/home/new-zealand/2022/10/live-updates-farmers-take-to-streets-in-nationwide-groundswell-protest.html
Hancock, F. (2021, 6 July). Who’s eating New Zealand. Stuff. Retrieved from https://www.stuff.co.nz/business/farming/300350351/whos-eating-new-zealand
Food and Beverage. (2022). NZTE. Retrieved from https://www.nzte.govt.nz/page/food-and-beverage
About the NZ Dairy Industry. DCANZ. Retrieved from https://www.dcanz.com/about-the-nz-dairy-industry/
Frangoul, A. (2022, October 12). New Zealand plans to tax emissions from livestock burps and dung. CNBC. Retrieved from https://www.cnbc.com/2022/10/12/new-zealand-plans-to-tax-emissions-from-livestock-burps-and-dung.
Food, glorious food – but what a price. (6 November 2022). NZ Herald. Retrieved from https://www.nzherald.co.nz/nz/food-glorious-food-but-what-a-price/
Wilkes, M. (2022, April 7). How do Kiwi supermarket prices compare to overseas? 10 staples, 10 supermarkets, 10 countries. Stuff. Retrieved from https://www.stuff.co.nz/life-style/food-drink/128200443/how-do-kiwi-supermarket-prices-compare-to-overseas-10-staples-10-supermarkets-10-countries
Mcilraith, B. (2022, March 10). Explainer: Why do we pay so much for our groceries in New Zealand? Stuff. Retrieved from https://www.stuff.co.nz/national/explained/128004400/explainer-why-do-we-pay-so-much-for-our-groceries-in-new-zealand?rm=a&cx_rmv3=true
Consultation on proposals to price agricultural greenhouse gas emissions. (2022 October 11). Ministry for the Environment. Retrieved from https://environment.govt.nz/news/consultaton-on-government-proposals-to-price-agricultural-greenhouse-gas-emissions/