NEW Zealand farmers are questioning the worth of an emissions trading scheme that eats into their profits, writes ANDREW MOLE
New Zealand's emissions trading scheme has been operating just a fortnight and already local farmers claim they are being hit hard in the back pocket.
The nation's peak agricultural body, the Federated Farmers of New Zealand, said diesel prices have already risen.
The first power bills since the introduction of the ETS are due at the end of this month and a price hike is also expected there.
Australia's National Farmers Federation is watching progress across the Tasman with interest - and some trepidation.
NFF economics and trade manager Charlie McElhone agreed with the Kiwis that the "harsh reality" of the system was it added costs to energy and energy-related areas.
Mr McElhone said NFF had data to show Australian agriculture was less carbon intensive than most of that in the northern hemisphere.
"Any policy in Australia must reward the positive contribution agriculture brings to the table and must not jeopardise our ability to compete internationally," Mr McElhone said. "The potential impact on our export markets is an area of key concern to us and to farmers."
FFNZ president Don Nicolson, a sheep and beef farmer at Invercargill on New Zealand's South Island, said he would lose about $1200 straight off the bottom line from the new tax.
Dairy farmers would be hit harder at $3300.
Mr Nicolson said all research showed there was no advantage in running an ETS as far as agriculture was concerned.
"University of Otago research in England on consumers after they had shopped showed the biggest influences on purchases were price and brand," he said.
Mr Nicolson said the profit per lamb in New Zealand is currently $9.06.
He said if everything - inputs, the exchange rate and the season - remained the same, the ETS will cut that return by $1.08.
"This is being marketed by Government as a 12 per cent cut to help fund the program, but it is the discretionary income which really counts," Mr Nicolson said. "Suddenly that 12 per cent becomes 36 per cent - and that hurts."
The New Zealand Government plans a review of its ETS next year and the FFNZ is targeting that as its last-ditch bid to end the tax before agriculture is dragged into it completely.
Mr Nicolson said the Government was planning a legislated market for carbon trading which he claimed would set up a false economy.
"Carbon is not scarce and legislated markets are not commodity markets," he said.
"If farming is sucked into this there will be a downpour of compliance and regulation."
He said while agricultural emissions have "apparently" risen 12 per cent between 1990 and 2007, it should be compared with the 72 per cent growth in transport-related emissions or the 120 per cent growth in electricity-related emissions.
"Agriculture has done an outstanding job and a farmer's sheer ability to innovate means since 1990 we're producing 7 per cent more lamb from 55 per cent fewer sheep and beef volumes are up 23 per cent but from 11 per cent fewer cattle," Mr Nicolson said.
"Dairy production growth per cow has averaged an amazing 26 per cent since 1990.
"All from 20 per cent less farmed land than was in production back in 1990.
"(We are) asking why $1.06 billion is being put into this tax but a mere $45 million, over four years, is being committed to international research solutions?"
Australian Prime Minister Julia Gillard has gone on the record saying she will not revive the Government's emissions trading scheme until at least 2013.
Ms Gillard has indicated she will revise Labor's climate change policy before the election and ruled out a carbon tax as an interim measure.
She said the Government will stick with its intention of reviewing global progress at the end of 2012 before deciding whether to proceed with the trading scheme.
