Meat processors respond to GHG plan

What did the red meat industry have to say about the Government’s ag emissions plan? Joanna Grigg picks out a few highlights from submissions from Silver Fern Farms, Alliance, ANZCO and Ovation.

There was a resounding “no” to an interim processor levy. ANZCO said the expense and resources to set up a levy for only six months was wasteful. Also, it wouldn’t take into account store stock traded. The Hawke’s Bay meat company Ovation said it would not drive behavioural change.

Silver Fern Farms proposed that sheep and deer have had their methane price discounted. This would be a transition phase, until viable mitigation strategies were available. It suggested a 25–35% transitional discount on the per kilo price for CH4 from sheep and deer (reviewed in 2030). It was realistic, simply administered, and a fair approach, the company said.

Silver Fern Farms batted hard for extensive farms, saying they had been undervalued in the He Waka Eke Noa (He Waka) process.

Farms had been put forward to be “less efficient on an output basis (profit and kilos of protein produced) without consideration of inputs (water, imported feed, synthetic fertiliser etc) and other system benefits such as biodiversity gains”.

The meat company linked the classic hill country sheep farm as the key brand the export economy was built on. “We strongly advocate that extensive farms that support grass-fed sheep, cattle and deer plus other crops, in actively managed, thriving biodiverse landscapes, are the farms the world needs. They are the basis of brand New Zealand in our global markets and are the foundation on which we can build nature-positive food production.”

“We are rapidly losing these farms.”

Ovation suggested delaying the scheme until mitigation technologies were available, to encourage farmers to take them up.

“Otherwise, it will just cause a drop in stocking rates and conversion to pine trees.”

Widen scheme design

Silver Fern Farms had devised a think-big plan to incentivise farmers to improve across-farm environmental outcomes, tying in greenhouse gas mitigation along with other nature-based solutions. This would make it fairer to extensive farms.

Dropping stock units on already balanced hill farms and stations was queried by the company. It suggested the blunt pricing and reward approach should be replaced with a wider farm systems approach that bundled up positive environmental effects and rewarded them together. It wants certainty for the future, with cross-party support for a design.

Ovation’s submission said the proposed scheme breached Article 2.1 (b) of the Paris Agreement, as it would significantly reduce sheep meat production while at the same time have an adverse effect on global warming. “We cannot support such a counter-productive strategy.”

ANZCO urged the government to consider that the red meat industry was already very efficient and had relatively low inputs.

Broaden Sequestration

ANZCO called for more sequestration categories to be recognised, including going back to those trees planted since 1990. “Technology does exist to measure sequestration, and some farmers are already using it.”

Silver Fern Farms gave the example of its Net Carbon Zero by Nature programme. It had tools that could do this work at scale and could easily be applied to verify on-farm sequestration and uptake of nature-based solutions. “Stop perpetuating the message that there is no affordable or accurate technology available to assess and audit on-farm vegetation.”

It said trust the farmers. Sequestration offsets had to be trust-based (random audits, large penalties) to avoid a costly application process.

The company pitched big again, calling for a wider Government sequestration strategy. It could include He Waka sequestration (farm-level off-setting), the NZ ETS (general off-setting) and the voluntary carbon market, taking account of the interconnectedness of these. They supported the transition of He Waka sequestration to the NZ ETS, over time.

Alliance made a practical suggestion to include all sequestration categories from 2027 and backdate recognition to 2025.

Market signals

Silver Fern Farms said the targets and metrics are important. But it saw more value in connecting to market signals and incentivising positive on-farm practices.

“We are backing these up with a range of market assurance and extension programmes in order to return increased value back through the farm gate.

It is supporting farmers to implement nature-based solutions via its programmes.

Alliance pointed out that the transition away from coal, fully by 2029, will have already delivered a 31% reduction in their carbon emissions by 2023. This was a market selling point.

Silver Fern Farms had an extensive plant programme to reduce processing emissions. The total cost of achieving the 42% reduction by 2030 will be between $12 and $15 million.

It had committed to setting a full scope, three-target by the end of 2023. This included all emissions from a defined boundary of farmer suppliers.

The submission said it saw the transition to a low carbon economy as an important opportunity to create new forms of value and position NZ Inc and hard-working farmers as climate innovators. Silver Fern Farms saw its role as connecting farmers to market signals, offering incentives to respond and backing it up with market assurance to get increased value back through the farm gate.

What’s the price?

Ovation said they can’t agree to a blank cheque. “Pricing can’t be left open ended for politicians to set based on ideologies or political drivers.”

Alliance Co-operative said it had drawn a line in the sand, calling for the maximum price for methane to be no greater than five cents/kg for the first three years of pricing.

ANZCO wanted a price set by an independent body with representation from ag sectors, saying that the price-setting process by government ministers could be hijacked by other wider national targets.

It listed three other drivers that should be included in price setting: equity, economic impacts and what other countries were doing. Not just methane reduction targets.

“Relook at the architecture so sheep, deer and beef don’t carry the burden disproportionally.”

Impact

Meat companies had a lot at stake and weren’t afraid to say it. Alliance noted that the meat industry was NZ’s second largest goods exporter, generating more than $10 billion in export revenue in 2021.

Chief executive of Alliance Group David Surveyor said the company was “extremely disappointed with the current form of the Government’s proposal, which will have a disproportionate and inequitable impact on the sheep, beef and deer sectors, our meat processing operations, reduce employment, inflict damage on rural communities and increase the price of food for families across NZ”.

Alliance said the prospect of reduced livestock volumes would “ultimately require us to review and consider plant consolidation and plant closures”.

Silver Fern Farms said the way the Government finally decided to price agricultural emissions and the system that supports this would touch on every farm in NZ. It would seriously influence its ability to create sustainable value for its business in the longer term.

Chief executive Simon Limmer followed up the submission with a comment about the importance of hill farms to the dairy industry.

“Extensive properties rely on intensive properties to succeed and vice versa. The dairy production system in NZ cannot succeed without hill and high country farms. If this balance is disrupted further by rapid land use change, then this impacts the whole of NZ’s food production and agricultural system.”

Tradeable methane quota?

Alliance responded with a no to this question, saying it would add administration costs to farmers, without necessarily reducing emissions. Trading included implementing a free allocation regime, which posed significant inter-sector equity issues, it said.

Say yes to collective reporting

Alliance’s submission addressed each consultation question. They saw benefits in having collective reporting, as it would enable a catchment or farming enterprise to have greater resources available for reducing or offsetting their emissions. It was specifically important for Maori land ownership considerations, it said.

Push to link emissions to wider enviro incentives

FARMERS DON’T MAKE DECISIONS in isolation to another aspect of their farms. Silver Fern Farms submission on the ag emissions scheme called for this holistic approach to be used when rewarding emission reduction, to tie in with other good practices.

Company chief executive Simon Limmer said a farm-system approach was one of the underlying principles of the company’s submission.

“There are broader attributes of our farming systems that also need to be taken into consideration and risk being undervalued if we solely focus on emissions pricing alone.”

He gave the examples of woody vegetation, which is not just good for sequestration but also soil stability, flood control, shade and shelter, habitat, bee health and pollination.

Its Nature Positive premium was linked to completion of the NZFAP+ audit to gold or silver standard. This included a comprehensive emissions management plan, as well as biodiversity and freshwater plans, amongst other requirements.

Limmer said the premium would be paid on a per kilogram basis for animals supplied.

He didn’t think on-farm sequestration that met NZ ETS standards should be rewarded separately. However, suppliers with verifiable Nature-Based Solutions should also be eligible for an incentive/ discount on emission liability based on the mitigation value of these, as well as their overall contribution to ecosystem services.

“There is work to do on how this could work in practice, but we think this would add significantly to the options available for farmers, especially those on sheep, beef and deer farms.”