Saturday, December 2, 2023

$9 billion shock

Neal Wallace
Claims the Government’s essential freshwater proposals could cost the livestock industry over $9 billion a year are selective, Agriculture Minister Damien O’Connor says.
Reading Time: 2 minutes

That is the estimated cost of compliance and lower production of meeting proposed freshwater reforms, submissions from Beef + Lamb and DairyNZ say.

More than 12,000 submissions were made by last week’s deadline.

The reforms have been labelled by some farming bodies as unbalanced, unnecessarily harsh and unsustainable.

O’Connor expects changes will be made and wants to work with the sector as the Government did with climate change policy.

The Government will do its own analysis but O’Connor says B+LNZ and DairyNZ looked at only one side of the equation.

“Substantial benefits have not been costed, including to NZ’s brand value in export markets, recreational and health benefits of clean water, animal health, greater tourism benefits.”

But the Government is listening.

“We have heard the concerns regarding nutrient bottom lines and this will be looked at closely.”

Environment Minister David Parker said DairyNZ overstates costs such as those associated with meeting existing freshwater rules.

B+LNZ chief insight officer Jeremy Baker says lack of detail forced submitters to respond to what the proposals contain.

DairyNZ strategy and investment leader David Burger says the reforms lack robust science and economic analysis.

“We believe the proposed nutrient limits for ecosystem health, national bottom lines for dissolved inorganic nitrogen and dissolved reactive phosphorus are based on overly simplistic relationships and not supported by robust science.”

Horticulture NZ chief executive Mike Chapman says it looked at cost to the health of NZers from the reforms.

The one-size-fits-all approach for expanding irrigation over 10ha unfairly penalises horticulture.

He wants a national environmental standard for the vegetable sector to recognise it is different from other land-based industries.

Rabobank NZ chief executive Todd Charteris described the proposed reforms as unnecessarily harsh, detrimental to the rural sector and unlikely to achieve the Government’s aims in a fair and balanced way.

There is already much uncertainty from low confidence in the rural sector, significant regulatory change and lack of clarity about transitional support and provisions.

Local Government NZ regional sector group chairman Doug Leeder says the reforms assume water issues are universally severe and urgent.

“We absolutely acknowledge the challenges facing freshwater bodies but the data shows that different waterways face different problems.

“That means we need tailored solutions to restore these ecosystems to a healthy state, not broad-brush regulation.”

Mid Canterbury Federated Farmers chairman David Clark described the reforms as nothing short of economic vandalism.

Clark has done what he calls a robust budget for his business. The game changer for him is the bottom line of 1mg of dissolved inorganic nitrogen a litre of water. 

“Currently the targets we are working towards are an aquifer drinking water standard of 6.9mg/l.” 

To achieve the required standards will cut nitrogen 76% and phosphorous by 50%, effectively meaning an end to irrigation and intensive land use. 

Clark’s irrigated mixed arable farm runs 1000 breeding ewes, 10,000 store lambs and 350 hectares of grain and herb seed vegetable seed.

To meet the new standards he will be limited to 3000 ewes, no trading lambs, 50ha of feed grain and pea crops and no irrigation.

“This dryland budget is based on the actual farming system we operated on this farm in 1994 when we came to Canterbury.”

It would cut crop income 92%, gross sheep income by 62%, sheep purchases by 99%, net sheep income by 28%, spending by 70%, EBIT by 68%, capital reinvestment by 74% and tax by 75%.

“In my view it is incredibly irresponsible to put a proposal out for public consultation that will result in nothing short of economic vandalism,” Clark says.

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