From one Wellington platform Reserve Bank governor Adrian Orr is telling the country strong global demand for NZ primary products is ensuring the economy remains resilient during the Covid-19 pandemic and is helping offset tourism losses. He says Fonterra’s forecast of a record opening milk price is “very good news” and is included in the bank’s projections.
From another platform, Climate Change Commissioner Rod Carr told hundreds of people – including farmers – at an agricultural climate change conference that for the agricultural sector there would be no way to wriggle out of slashing emissions.
Carr said agriculture made up about half of NZ’s emissions, and this needed to be reduced to meet climate obligations.International customers would go elsewhere, costing the economy billions of dollars in the coming years.
So here’s the problem:
Should dairy farmers be planning to milk as many cows as they can next season — or should they be sending animals to the works to cut emissions?
It’s a real dilemma for individual farmers, but perhaps a larger one for the country’s political leaders.
But the government has created the dilemma for itself. It knows that if it sits on its hands, it arouses the anger of climate change crusaders. And if it acts to cut emissions in the manner proposed by Dr Carr, it means a sharp cut in living standards for New Zealanders. After all, Fonterra will be pumping around $12bn into the rual economy next season.
Farmers are bound to have varying perspectives on the issues. Some will contend it is up to the government to put vastly bigger investments into the research to develop the grasses and animals (through gene editing, for example) that will lead to lower methane emissions. And they would be right.
It’s true, as the Reserve Bank governor says, that robust economies with strong primary industries are positioned to fare much better than the rest post- Covid.
“It’s a positive for the country. That’s one of the reasons why the NZ economy has remained as resilient. We have had strong global demand for our primary products and a strong terms of trade.”
Orr says the dairy boost is needed but notes it only partially offsets some of the massive losses of income from tourism and tourism-related sectors that have been hurt by border closures during the pandemic.
“There are significant parts of the economy or sectors that are struggling and will continue to struggle until normality,” he said.
Dr Carr believes there has been a mindset in the agricultural sector that it should be given exemptions because it is such an export powerhouse, but he insists NZ’s trading partners are increasingly making decisions based on the climate impact of products.
He said foreign regulators would take unkindly to exporters not pulling their weight, and this, combined with changing international consumers preferences, posed a much greater threat to business than local regulations.
“The world will hold countries to account,” he said.
“So the challenge for New Zealand … is what club do we want to be in?
“Because there’s no doubt there will be rogue nations but is that the company we want to keep?”
Carr said agriculture made up about half of New Zealand’s emissions, and this needed to be reduced to meet climate obligations.
He said international customers would go elsewhere, costing the economy billions of dollars in the coming years.
“NZ will transfer real wealth to the other nations who have done more, sooner.
“And, in a way, that’s an accountability regime. You will be transferring wealth in your lifetime for our failure to do as much as we can domestically.”
He says often those in NZ’s agricultural sector argue that they are the most efficient farmers in the world.
“The most efficient what?” Carr said.
“The most efficient producer of ruminant pastoral meat and milk the way [NZ does] it.
“Well that’s good, we defined a class and when we were the best in it. The Americans usually win the prize for that approach to the ‘best of’.
He contends New Zealanders per capita produce about 16 tonnes of emissions a year, compared with just four tonnes in India and China – and China is the world’s manufacturer.
On that farmers might take Carr’s view with a grain of methane. After all China’s output of greenhouse gases far outstrips NZ’s. It is responsible for 27% of global emissions, more than double those of the US. NZ by comparison emits around 0.5%.
Even if NZ was to slash emissions by half, the cut would hardly make any difference to the present rate of global warming.
And as one farmer has said, the changes the commission suggested – dropping methane by 10% by 2030 – did not make financial sense for many farmers, so it would not happen.
Climate change advocates talk about sustainability.
”But unless it’s financially sustainable, it won’t happen and we won’t have exports”.