New Zealand must quickly come to grips with how agricultural-sourced methane and nitrous oxide are going to be managed within the ‘Zero Carbon Act’, more formally called the ‘Climate Change Response (Zero Carbon) Amendment Act 2019’. This Act brings both gases into the Emission trading Scheme (ETS) in 2025 unless an alternative charging system can be devised in the meantime.
Initially, the ETS charges will be only 5% of the full carbon charge at that time. However, the percentage will then increase at 1% of the full price each year. Initially, it will only be a few cents per kg milksolids, and a few cents per kg of sheep and beef carcass. But over time it will build up and become painful.
Given the media negativity to dairy, most people probably don’t realise that it will actually impact on sheep and beef profitability more than on dairy profitability. Continue reading
Each time I write about carbon farming, I think it will be the last time I do so for quite some time. But then something new comes up and there is a new twist to be explored. Right now, there are two new twists, potentially pulling in different directions.
First, just prior to the COP26 talkfest in Glasgow, James Shaw and Jacinda Ardern issued a joint press release stating that New Zealand will increase the carbon targets to be achieved by 2030. The specifics are more than a little obscure, but the increase is going to be considerable. Continue reading
No-one has yet found an alternative to dairy for New Zealand’s export-led economy
The New Zealand economy is export-led. That is the way it has to be for a small mountainous country in the South Pacific, largely bereft of mineral resources and with minimal manufacturing, but blessed with a temperate maritime climate and lots of rain.
Alas, both history and current realities tell us that New Zealand has limited international competitive advantage in relation to technology-based engineering. That statement will be offensive to some, but the hard reality is that we cannot be considered world-leading in relation to chemical, electrical or mechanical engineering beyond small niche areas. Nor are we internationally competitive in relation to manufacture of pharmaceuticals. And when we do develop new technologies, it is not long before the owners typically set up manufacturing closer to the big international markets, using international equity to finance that move.
The painful reality is that pharmaceuticals, computers, televisions, cars, trucks, fuel and even much of our food comes from overseas. That includes rice, bananas, apricots and most bread-making wheat. Open the pantry door and have a look at the small print as to where most of the tinned food comes from. Most of it comes from Australia, China and Thailand. Continue reading
Carbon and forestry, increasingly linked to overseas investors, continue to outmuscle sheep and beef but nothing about carbon is simple
I had intended this week to move away from forestry to other topics. But once again, I have been drawn back to forestry because it is the biggest issue right now facing rural land-use.
For those who are farming sheep and beef there is the disconcerting reality, but also in some cases exciting reality, that carbon farming is now the most profitable land use.
Somewhat ironically, this changing land-use is also relevant to the dairy industry, which in combination with the other pastoral land uses is supposed by 2030 to reduce methane by 10 percent. It is looking as if much of this might now come from the decline in sheep and beef. Continue reading
The situation is becoming more dismal with exponential growth well under way
Almost five days have slipped by since I wrote that we needed a COVID19 reset. Since then, the infection trajectory has taken off, as I both feared and expected. The extent of the crisis must surely now be starting to become more apparent to the people of New Zealand.
My argument five days ago was that we needed to tighten restrictions across the northern North Island for a period of four weeks to give the vaccine a chance to catch up. Also, we needed to set hard borders at defendable points alongside the existing soft borders in Auckland, Northland and the Waikato.
Somewhere close to Waiouru is a defendable point in the North Island, with associated border points on broadly similar latitudes across the North Island. I reckon there are five or six border points to totally seal the two parts of the North Island. Cook Strait can provide the hard border between the North and South Islands.
There were over 260 online comments on that article and a consistent message from many was that Aucklanders would not stand for another period of Level 4. That may well be the case. But unless infection prevention measures are increased one way or another, then the outcome is inevitable. Continue reading
The current COVID strategy needs an urgent reset. It is now evident that staying in Level 3 over coming weeks will lead to a dismal Christmas
Last year I wrote many articles on COVID19, starting five weeks before the first lockdown. The common thread running through most of them was that we were underestimating the beast, being reactive rather than proactive. But we were lucky and we got away with our tardiness.
And then around September 2020 I largely stopped writing about COVID19. The reason was simple. Our strategies had caught up with the COVID situation. My very last article was in January where I thought that we were underestimating the effects COVID19 would have throughout 2021.
Now nine months later, I am writing again about COVID19 because we are acting too slowly to the new emerging situation. Events of the last week have demonstrated that we need a COVID reset.
The key issues relate to how we can get through the next six weeks, giving vaccine rates a chance to reach higher levels without an infection blowout in the meantime. The associated issue is the need to treat New Zealand during this time as three distinct regions with hard borders between them. Continue reading
There are close on 400,000 hectares of non-registered post-1989 forests eligible to join the ETS. Once registered, many owners could within one year earn $7500 or more per hectare in historical credits back to 2018
This is a further article in a series I have been writing exploring the issues of carbon farming. The issues are important because we are on the cusp of massive land-use changes. These are driven by the current economics of carbon farming now being far superior to sheep and beef farming on most classes of land.
Carbon farming is part of a virtual market, called the Emission Trading Scheme (ETS) in which there is no exchange of a physical product. As such, the ETS is controlled by Government rules and regulations, rather than by physical supply and demand factors.
The carbon farming component of this virtual market relates to post-1989 forests. These are forests on land that was not in forest on 31 December 1989 or in the immediately preceding years. Continue reading
Fonterra pulls up the wagons to defend its territory, but is also hoping to sortie out with new nutritional endeavours
Fonterra’s release of its 2020/21 annual report has occurred in association with an additional big dump of information laying out the proposed future for Fonterra. In essence, Fonterra is confirming that it is going to be a New Zealand company owned by farmers, with the first priority being to maximise returns to farmers.
That position should in itself come as no surprise. Fonterra has been talking that language for three years as it has divested itself of various overseas assets. However, this is the first time that there is a more comprehensive laying out of the long-term strategy, including consequent policy decisions. There are multiple headliners. Continue reading
The Government never foresaw the land-use forces they were unleashing with the ETS
In recent weeks I have written multiple articles on the Emission Trading Scheme (ETS) with a particular focus on forestry. This week I also had an extended interview with Kathryn Ryan on RNZ ‘Nine to Noon’. However, there is still lots more that needs to be said.
The bottom line is that carbon forestry is now far more profitable than sheep and beef farming on nearly all classes of land. We are indeed on the cusp of the greatest rural land-use changes that New Zealand has seen in the last 100 years. Continue reading
The carbon price is now high enough to change land-use sufficiently to blow away sheep and beef, but too low to significantly influence emission behaviours elsewhere
The concept of ‘carbon farming’ has been around for a long time. I recall carbon farming discussions with my colleagues at University of Queensland back in the early 1990s, but the industry has taken a long time to finally arrive. Well, it is now here. And it has the potential to overwhelm not only the sheep and beef industries, but also have big impacts on the timber industry. Continue reading