Pragmatic proposal to reduce agricultural emissions and enhance exports and economy

Prime Minister
Agriculture
Climate Change

Proposal would see New Zealand farmers lead the world in reducing emissions and help give NZ a competitive advantage in green conscious global marketplace.

  • Modelling shows Government’s proposal should meet Zero Carbon Act 2030 methane reduction target
  • Government largely adopts farming sector’s proposal to price emissions at the farm level, giving farmers control over their own farming systems with the ability to reduce costs
  • Revenue recycled back into agriculture sector through new technology, research and incentive payments to farmers
  • Consultation to work through sequestration, levy setting process, and transition assistance. Consultation open from now until 18 November 2022.

The Government has released for consultation a pragmatic proposal to reduce agricultural emissions, setting up our biggest export earner for future success and putting New Zealand on track to meet our 2030 methane reduction target, Prime Minister Jacinda Ardern has announced.

The Government has included many of the recommendations of the He Waka Eke Noa Partnership of agriculture sector groups for farm-level emissions pricing, and proposed modifications in the consultation document based on advice from the Climate Change Commission. 

“This is an important step forward in New Zealand’s transition to a low emissions future and delivers on our promise to price agriculture emissions from 2025,” Jacinda Ardern said.

“The proposal aims to give New Zealand farmers control over their farming system, providing the ability to reduce costs through revenue raised from the system being recycled back to farmers, which will fund further research, tools and technology and incentives to reduce emissions.

“The proposal would see New Zealand farmers lead the world in reducing emissions, delivering a competitive advantage and enhancing our export brand.

“No other country in the world has yet developed a system for pricing and reducing agricultural emissions, so our farmers are set to benefit from being first movers.

“Cutting emissions will help New Zealand farmers to not only be the best in the world but the best for the world; gaining a price premium for climate friendly agricultural products while also helping to boost export earnings.

“We’re committed to building a system that works for farmers. We will continue to work in partnership to drive as much consensus as possible to ensure we have a system that lasts the distance.

“The consultation provides an opportunity for people to provide feedback on the issues of sequestration, the levy setting process and transition support,” Jacinda Ardern said.

Agriculture Minister Damien O’Connor said the proposed farm-level emissions pricing system supported farmers to make decisions about what they do on their farms by incentivising emissions reductions and climate friendly practices.

“By rewarding farmers who take action to cut their emissions we can support more farmers to improve their productivity and profitability while achieving climate goals,” Damien O’Connor said.

“The Government is already supporting farmers by investing in the development of high-impact technologies and practices, including the establishment of the new Centre for Climate Action on Agricultural Emissions to shift the dial on climate friendly farm practices.

“Farmers are already experiencing the impact of climate change with more regular drought and flooding. Taking the lead on agricultural emissions is both good for the environment and our economy,” Damien O’Connor said.

Climate Change Minister James Shaw stressed the importance of working with farmers to reduce emissions, rather than relying on forestry offsets.

“The Government made a promise to put a price on agriculture emissions, after thirty years of inaction. 

“By 2025 New Zealand will introduce a system that means farmers pay a price for their emissions and are rewarded for taking action to reduce their climate pollution. Countries grappling with the same challenges as us are once again looking to New Zealand for climate leadership.

“The levy improves on the proposal put forward by the He Waka Eke Noa partnership and brings New Zealand’s gross methane reduction targets within reach. It is better than the ‘backstop’ of bringing agriculture into the Emissions Trading Scheme, which could see agribusiness simply offsetting farm emissions without making any actual changes to reduce emissions on farms. 

“Cabinet considered a range of options alongside the levy, including a system based on managing the total volume of pollution, rather than managing the price. While this was not Cabinet’s preferred option for 2025, we are seeking feedback on its merits.

“There are a few other outstanding issues which we are keen to hear views about, such as how nitrous oxide emissions from fertiliser should be treated,” said James Shaw.

Notes to editor:

Current emissions reduction support for the agriculture sector

  • Emissions reduction support: $380 million to help get new tools, technology, and practices to farmers quicker to reduce on-farm greenhouse gas emissions. It includes the establishment of a new Centre for Climate Action on Agricultural Emissions to unite efforts of accelerate research and development. A key part of that work is a joint venture with industry (ANZCO Foods, Fonterra, Ngāi Tahu Holdings, Ravensdown, Silver Fern Farms and Synlait) to accelerate the development of tools to help farmers. Initial indicative commitments would see around $172 million invested over the next four years by industry and government to develop and commercialise practical tools and technologies for farmers.
  • On Farm Support: $55 million to establish and roll out an On Farm Support service. It will help farmers and growers navigate requirements around biosecurity, climate, water, and the environment.
  • Integrated farm planning accelerator fund: $14.4 million to invest in targeted initiatives that help farmers, growers, and whenua Māori to adopt an integrated approach to their farm planning.
  • Catchment groups: MPI has invested more than $34 million in the last three years to support around 200 catchment groups and thousands of farmer across the country to help improve land management practices.

Support through Sustainable Food and Fibre Futures (SFF Futures)

As at 31 August 2022, MPI and the sector had committed investment of around $517.48 million in a large range of projects, from understanding regenerative farming practices in the New Zealand context to exploring and progressing new sectors.

SFFF Sheep and beef project:

  • We’re co-investing in a 7-year, $16.7 million led by Beef + Lamb New Zealand:
    • It aims to deliver best practice genetic selection tools to improve the productivity and profitability of New Zealand’s beef industry, and lower the beef sector’s greenhouse gas emissions by delivering cows with a smaller environmental hoof-print. 
    • It’s expected to result in more efficient cows within the next 25 years, with the programme targeting a 10 percent reduction in greenhouse gas emissions per kilogram of product produced.

SFFF Regenerative Agriculture support:

  • We're co-investing $54.74 million (as at 31 August 2022) into 11 regenerative agriculture research projects.
  • These regenerative agriculture research projects aim to develop a sound evidence base of what works well for our soils, climates and farming systems, and include:
    • Co-investing $26.1 million into New Zealand’s largest ever study on the sustainability of our farming sector and the potential of regenerative practices through the Whenua Haumanu project, led by Massey University. This is the most comprehensive study of pastoral farming ever undertaken in New Zealand. It will scientifically build a picture that includes soil biodiversity, pasture performance, animal production and welfare, and the quality of the food produced.
    • An $11.58 million whole-farm scale study in North Canterbury to demonstrate the science of regenerative farming. 
      • This study aims to demonstrate a viable alternative approach to enhance soil health, lower the environmental footprint, reduce water use, complement the mātauranga Māori (knowledge) of Māori landowners, and be profitable.
    • A $3.3 million project that is assessing the economic and environmental impacts of adopting regenerative diverse pastures in a Taranaki dairy farming system.  It will develop an evidence base to prove any links between:
      • diverse pastures and reduced nutrient loss
      • improved milk macro and micronutrients
      • increased soil water retention
      • soil carbon sequestration
      • increased production and profits.
    • A $2 million project that will scientifically test and incorporate new forage management practices and principles of regenerative farming into a dryland sheep and cattle farming system. 
      • It will compare practices like utilising compost, diverse seed mixtures, longer feed residuals, and deferred grazing against conventional farming practices within a dryland system.
      • The project will also focus on improving farmer resilience and decision-making.
    • A $1.4 million project that aims to develop science-based resources for farmers so they can take long-term action to boost biodiversity on their farms, including case studies in different regions and tools to boost capability.
    • A $356,200 project that will build awareness of the challenges and opportunities surrounding regenerative agriculture verification across the sheep and beef sector.
      • It will help promote and support the regenerative production of lamb meat and by-products, and deliver premiums to farmers by securing high-value contracts in overseas markets.