The agreement means agriculture will not join the Emissions Trading Scheme but instead work with the Government to reduce emissions.
There will be no processor levy from 2020 to 2025 as initially proposed but farmers and growers will have to implement farm plans and calculate their emissions and offsets at the farmgate from 2025.
Progress will be reviewed in 2022 and if the Government is unhappy it will revert to the original legislation.
“We are pleased that the Government has recognised that it does not make sense to bring agriculture into the ETS and that we have a pathway to work with the Government to develop a more appropriate framework,” the sector said in a joint statement.
“We welcome this pragmatic and sensible decision by the Government to work in partnership with industry to achieve tangible on-farm change and hope that it might provide a blueprint for the way we work together to solve environmental challenges in the future.”
The 11-member primary sector group has committed $25m over five years to achieve these goals.
That group is Apiculture NZ, Beef + Lamb, DairyNZ, Dairy Companies Association, Deer Industry NZ, Federation of Maori Authorities, Foundation for Arable Research, Federated Farmers, Horticulture NZ, Irrigation NZ and the Meat Industry Association.
Dairy NZ chief executive Tim Mackle says a broad-based tax, as initially proposed, would have added cost with no environmental benefit.
“We are pleased the Government has instead listened to the strong advocacy from our sector and will be working with agricultural groups, including DairyNZ, on a plan to drive real behaviour change on farm rather than introduce a new tax.
“A new tax, in the form of a processor levy in the Emissions Trading Scheme, would have taken money out of farmers’ pockets at a time when it would be better invested on-farm to prepare for and start the process of reducing emissions.”
BLNZ hailed the decision as recognition the ETS is not the right mechanism for agriculture.
“By working with the Government we now have the best opportunity to develop a framework that is practical and simple for farmers, rewards positive change and supports the sector to reduce and offset farming’s emissions,” chairman Andrew Morrison said.
Mackle and Morrison are disappointed the Government will introduce legislation for processor pricing for emissions in 2022 if it is unhappy with progress, saying introducing legislation that might not be used is unusual.
Federated Farmers board member Andrew Hoggard says the sector needs more technology before entering the ETS.
“We need more tools in the toolbox. We are looking forward to exploring all these avenues further with the Government.
“New Zealanders also need to realise that any reduction in emissions achieved here through reduced production will likely only be replaced with production in countries that have higher emissions per unit of output and usually by subsidised farming sectors.”
Climate Change Research Institute director Professor Dave Frame welcomed the news saying for too long the issue has not been addressed.
“For too long we have circled the drain on agricultural climate change issues so it is great to see a sensible, practical, scientifically defensible deal being worked out.
“The Government deserves credit for listening to good scientific and policy advice and for being prepared to reject outdated approaches.
“Farming leaders deserve credit for listening to the science and developing practical plans that put their sector on a path to a healthier planetary future.”
NIWA’s chief climate scientist Andrew Tait says the organisation is keen to help.
“Our scientists have world-leading expertise in very accurately measuring atmospheric greenhouse gas concentrations using a range of instruments and techniques and we are already thinking about novel ways of using and adapting these systems for paddock- and farm-scale application.”