Our emissions are tiny, so why are we racing to kill our export industry?

The late, great President Ronald Regan was well-known not only for his fine stewardship of the US while in office and outstanding foreign relations (“Mr Gorbachev, tear down this wall”)...

The late, great President Ronald Regan was well-known not only for his fine stewardship of the US while in office and outstanding foreign relations (“Mr Gorbachev, tear down this wall”) but also for his quips, jokes and one-liners.  My favourite among many is from back in 1986 when he said “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.”  So true in many regards and at present in both the US and New Zealand, seemingly more and more applicable.  Borrowing from President Regan’s famous quote but acknowledging I cannot pull it off even close to as well as he did, I would like to convey to you the three most terrifying numbers you need to remember from this past week:  these are 74, 0.09% and 65%.

The first, 74, is where New Zealand sits in the rankings of CO2 emissions by country.  In other words, there are 73 countries in the world that emit more CO2 than do we.  The second number, 0.09%, is New Zealand’s share of global CO2 emissions.  To illustrate just how small 0.09% is read on:  it is nine of ten thousand.  If Cheptegei’s world record 10 kilometer run of 26 minutes and 11 seconds represented the world’s carbon emissions, NZ’s run would last just 1.4 seconds.  If a trans-Tasman flight’s altitude of 10,000 meters represented the world’s carbon emissions, NZ would be flying nine meters off the ground.  And if it took 5,000 buckets of water to fill a 50,000 litre swimming pool and we filled it based on each country’s CO2 emissions, New Zealand would tip in a little over four buckets versus, for example, China’s 1,460.  i.e. miniscule.  I will save the third number, 65%, for later as it truly is terrifying.

So New Zealand makes up a minute, paltry 0.09% of global carbon emissions.  And of that it is estimated that beef, lamb and dairy account for around 50% or not even 0.045% of the world total.  Even more miniscule.

This week our government announced its proposed (read, it is coming) pricing of agricultural emissions that will require farmers to pay for their agricultural greenhouse gas emissions including literally the methane belched out by cows and nitrous oxide emitted through livestock urine.  Prime Minister Ardern beamed that the proposal “…means New Zealand farmers are set to be the first in the world to reduce agricultural emissions.” As if that’s something remarkable and about which to be gleeful.  She also said that “…our farmers are set to benefit from being first movers.”  Moreover, she added “Cutting emissions will help New Zealand farmers not only be the best in the world but the best for the world.”  Remember President Reagan’s quote above please.

This tax scheme will most certainly cut farm production.  It will not have any bearing whatsoever on global greenhouse gas emissions: zero, zilch, nil, nada etc.  The tiny, tiny gap in global beef, lamb and dairy production and trade resulting from New Zealand’s resulting reduced output will be gladly, eagerly and easily taken up by any and every other country involved in agriculture.  In a heartbeat.  And here’s one of the many rubs:  the NZ dairy sector, for example, already has the lowest emissions per kg of production thanks to, among other things, year-round pasture grazing and relatively low use of supplements.    The sector’s overall carbon footprint (as measured by something termed kgCO2e kg FPCM-1) is 0.77, Australia’s is 1.06, France 1.08 the US 1.23 with Germany and China over 1.5 and India in to the 2s. Substitution away from New Zealand sourced product will unequivocally increase global emissions.  When the substitution question was put to Minister O’Connor his answer was something like…well it may or may not happen that way…yet he’s still happy to promote a policy of certain production decline here in Aotearoa.

Back to the third most terrifying number of the week, 65% which I really think has not been properly considered or addressed.  The Government itself predicts there will be significant decreases in agricultural production.  The ANZ Bank economics team quotes the Government’s modelling results that show “…the decreases expected could be as great as 9.8% for milk solids, 23.6% for lamb and 65.4% for beef.”  Excuse me?  A 65% reduction in beef production and the Prime Minister is grinning during her announcement of this proposal?  Just think of the downstream consequences – processing, export, domestic food prices, local jobs etc. of such a drop in production?  What on earth is going through policy makers minds when they announce this stuff?  Well, a further quote from the ANZ Bank might explain why we are in this position:  “The pricing of…emissions will be revised periodically (annually or every three years) based on advice from the Climate Change Commission (CCC).” But the ANZ Bank adds “the CCC lacks practical agricultural knowledge so will need to consult closely with farmers so that the impact of pricing decisions is fully comprehended.”  How can anyone take these recommendations seriously when those making the recommendations do not have the requisite knowledge?

As I stated in my first BusinessDesk article in early August, we only do a few things here in NZ in terms of economic significance certainly on an international scale and by far and away the most significant and important is agriculture.  Our Ministry of Primary Industries recently reported that in the past year New Zealand’s Food and Fibre (F&F) export amounted to $53.3 billion.  We only have a $300 billion economy, so the F&F export contribution is rather significant.  MPI also stated that F&F accounted for 82% of all NZ’s merchandise exports last year and that this percentage has been growing for the past ten years.  Growth in primary industry exports exceeded that for non-primary exports in nine of the past ten years.  Moreover, the F&F sector (including the full chain of production, processing and commercialization) accounted for just over 11% of New Zealand’s total GDP.  If the Government jeopardises the $53…then it puts the $300 at risk and the country and society simply cannot afford it.  Do not touch the goose that lays the golden egg.

If you think that we need to interfere with our already world-leading agricultural sector in order to make a meaningful rather than virtuous impact on global emissions, then our government should be looking to either or both boost our agricultural exports and / or export our production and processing technologies to other agricultural countries.  If we are already the most efficient beef, lamb and dairy producers at least in terms of emissions relative to output surely having a greater share of the global pie would reduce global emissions?

Using the Government’s own numbers, if we ceased all agri-production global greenhouse emissions might drop by 0.045%.  If we led other producers to reduce their agricultural greenhouse emissions by just 1% by adopting our production efficiencies the global emission savings would be in the order of 25 times greater.  Surely, that’s a better way to tackle global agricultural greenhouse emissions rather than potentially decimating the New Zealand industry and potentially New Zealand?

The three most terrifying numbers of the week:  74 meaning there are 73 countries that emit more greenhouse than us.  0.09% which is New Zealand’s share of global greenhouse emissions and the scariest of all, 65%, which the Government itself estimates could be the decline in beef production (let alone the flow-on effects) in New Zealand once its agriculture greenhouse emissions scheme is implemented.  Give me strength.