Response ID ANON-SYE4-4PQG-1
Submitted to Pricing agricultural emissions
Submitted on 2022-11-18 21:01:31
Submitter details
1 Submitter name
Individual or organisation name:
9(2)(a)
- Fortuna Group Ltd
2 Are you submitting as an individual or on behalf of an organisation?
Organisation
3 What is your contact email address?
Email:
9(2)(a)
4 Which region are you in?
Select your region:
Southland | Murihiku
5 Please choose any you are associated with:
Business, Farmer/grower
Other: please specify here:
Section 1: About this consultation
Section 3: The Government’s proposed policy designs
Read section three - HTML format
1 Do you think modifications are required to the proposed farm-level levy system to ensure it delivers sufficient reductions in gross emissions
from the agriculture sector?
Yes
Please explain your answer here:
Fortuna Group does not support the Government’s proposal to price agricultural emissions. The significant changes that Government has made to the
sector’s He Waka Eke Noa proposal are completely unacceptable. They create inequity, severely limit our ability to be recognised and rewarded for the
actions we take on-farm and will have a negative impact on our business and the rural communities we work and live in.
Fortuna will not accept a system that threatens the viability of farming businesses and rural communities in New Zealand. Through the He Waka Eke Noa
Partnership, the sector and Government co-developed a credible package and plan to reduce emissions, which still protected the viability of farming in
New Zealand. We are disappointed that the Government has significantly
departed from these recommendations in their response - they have needlessly disrupted a credible but finely balanced system. We support the sector’s
He Waka Eke Noa proposal - an equitable and effective emission pricing system that would work for everyone
2 Are tradeable methane quotas an option the Government should consider further in the future?
No
Why? Please explain your answer here:
This option would lead to poor outcomes and create inequalities between different parts of the sector. This option would also create an additional
administrative burden at the farm level.
Farmers would have to spend a significant amount of time trading in a carbon system or rely on carbon advisors. This would result in additional costs for
farm businesses.
3 Which option do you prefer for pricing agricultural emissions by 2025?
A farm-level levy system including fertiliser
Why? Please explain your answer here:
Pricing at farm-level gives us control to manage our farm business and emissions profile, by giving us the ability to be recognised and incentivised for
actions on farm. We need to be able to influence the price we face and have ownership over the problem and the solutions. We also want fertiliser
included in the farm-level calculation, so that we can consider all on-farm actions and levers to reduce greenhouse gas emissions in one place. We do not
support revenue raised from a levy on fertiliser being distributed across the wider economy.
Read section three continued - HTML format
4 Do you support the proposed approach for reporting of emissions?
No
Why? Please explain your answer here:
Fortuna supports the proposal for a farm-level calculator – one that transitions from a
simple to more detailed tool over time. It is critical that the proposed reporting approach enables us to receive recognition for our actions on-farm.
Fortuna does not support government’s lack of clear milestones for when a detailed calculator will be implemented.
What improvements should be considered? :
Government should align with the sector’s proposal and provide a pathway with
timebound milestones for transitioning to a more detailed calculator that accurately reflects farmers efforts on-farm.
We have built a pond that captures methane and turns this into power to run our dairy shed and farm. We have invested significantly into this and have
calculated we have reduced methane output by 11% annually,
We have also reduced our stocking rates over the past 10 years from 3.1 cows/ha to 2.9 cows/ha while holding or slightly increasing milk production - we
estimate this has also reduced methane by 5% annually.
We have also employed a sustainability manager across our business and developed an Environmental Strategy with key targets in methane reduction
and other Environmntal benefits. We have committed approx $250k annually into this to improve our footprint and continue to make our farms more
efficient.
5 Do you support the proposed approach to setting levy prices?
No
Why? Please explain your answer here:
Fortuna does not support the Climate Change Commission being the only source of advice for the minister when setting the levy price, and the criteria for
price setting being solely based on the sector’s progress towards emissions targets. The combination of these factors fails to account for sector
circumstance, and what price is needed to drive change whilst maintaining a profitable sector and vibrant rural communities.
What improvements should be considered? :
Decision makers should use the He Waka Eke Noa Partnership proposed pricing
criteria when setting the levy price, which include progress towards emissions targets; availability and cost of mitigations; social, cultural, and economic
impact on farmers, regional communities, and Māori agribusiness; available scientific, mātauranga Māori, and economic information; emissions leakage
from production moving offshore and impacts on food security.
Fortuna strongly believes that industry needs a seat at the table when making decisions on levy price.
The price setting process for nitrous oxide should be set in conjunction with
incentives and sequestration offsets. Fortuna believes that Ministers should set levy prices in accordance with the principle of only collecting enough levy
to deliver on the scheme’s intended purpose and outcomes rather than the government’s proposed model which would create surplus revenue.
As written above we already invest heavily in this area and do not want to see our investment tied up with administration and compliance costs.
Read section three continued - HTML format
6 Do you support the proposed approach to revenue recycling?
Yes
Why? Please explain your answer here:
Fortuna believes that revenue should be spent on helping the sector transition through incentives, sequestration, research & development, and
administration of the pricing system. It is critical the sector advises the Minister on the strategy for levy re-investment. Fortuna is strongly opposed to
revenue being spent outside the agriculture sector, such as the suggestion to fund additional domestic or international emissions reductions/offsets.
What improvements should be considered? :
7 Do you support the proposed approach for incentive payments to encourage additional emissions reductions?
No
Why? Please explain your answer here:
Fortuna does not support incentives paid out as a rebate. This adds complexity and cost for the farmer and creates uncertainty on how and when they
will receive the incentive payments. Fortuna does not support the Government’s proposal to use incentive payments to drive land-use change. Incentive
payments should be focused on enabling farmers to uptake new technologies on-farm or drive best-practice farming.
What improvements should be considered? :
The Government should fully adopt the sector’s He Waka Eke Noa proposal and
include the incentive payment as an offset of the farm-gate price.
Read section three continued - HTML format
8 Do you support the proposed approach for recognising carbon sequestration from riparian plantings and management of indigenous
vegetation, both in the short and long term?
No, none of the above
Why? Please explain your answer here:
It is completely unacceptable that the government has significantly reduced the scope of vegetation recognised and quantity of sequestration rewarded.
This limits our ability to offset our emissions price and manage our farm businesses. The proposed categories do not provide adequate recognition for
sequestration given the cost of active management of indigenous vegetation.
What improvements should be considered? :
Fortuna strongly believes that all original vegetation categories proposed by the
He Waka Eke Noa Partnership (shelterbelts, riparian, active management of indigenous vegetation, indigenous vegetation, scattered exotics, perennial
cropland) should be included in the scheme. If the Government is going to impose a levy on all emissions on-farm then it should recognise all the
sequestration that takes place too, as per the sector’s proposal. In principle, having on-farm vegetation shifting to the NZETS could work. However, the
government needs to provide certainty
and commitment on the pathway to shift sequestration (from all HWEN proposed categories) into the NZETS.
Read section three continued - HTML format
9 Do you support the introduction of an interim processor-level levy in 2025 if the farm-level system is not ready?
No
Please explain your answer here. If you selected no, what alternative would you propose to ensure agricultural emissions pricing starts in 2025?:
The Government needs to be held accountable for its own delivery. He Waka Eke Noa
highlighted that the creation and implementation of an interim processor levy would increase the compliance, cost, and complexity for farmers. The
interim processor levy would be counterproductive for the overall goal of a simple cost-effective scheme.
If the Government cannot deliver a farm level levy by the 1st Jan 2025, then they
should look at an extended start date or an alternative staged approach.
Section 4: Impacts
Read section four - HTML format
10 Do you think the proposed system for pricing agricultural emissions is equitable, both within the agriculture sector and across other
sectors, and across Aotearoa New Zealand generally?
None of the above
Why? Please explain your answer here:
Government’s proposal will lead to increased forestation of productive land and a reduction in NZ’s overall earnings. We are worried about the impact on
rural communities, with job losses and decreased economic activity in the rural areas. We are concerned that the government’s proposal will have a
substantial impact on the mental health of people in the rural sector.
What changes to the system would be required to make it equitable?:
11 In principle, do you think the agricultural sector should pay for any shortfall in its emissions reductions?
No
Please explain your answer here. If you selected yes, do you think using levy revenue would be an appropriate mechanism for this?:
All revenue should be used for the sector to achieve environmental outcomes. Using levy
fund to pay for a shortfall will reduce the amount of funding available for emissions reductions programs, leaving the sector worse off in the long term
and making it harder to achieve targets.
12 What impacts or implications do you foresee as a result of each of the Government’s proposals in the short and the long term?
Write your answer here :
13 What steps should the Crown be taking to protect relevant iwi and Māori interests, in line with Te Tiriti o Waitangi?
Write your answer here:
How should the Crown support Māori landowners, farmers and growers in a pricing system?:
Provide general feedback
15 Do you have any other priority issues that you would like to share on the Government’s proposals for addressing agricultural emissions?
Add your comments, ideas, and feedback here.:
Fortuna believes that all farmers and growers should be able to report and pay for
emissions collectively. The government’s proposal limits the ability to streamline farm businesses with respect to emissions reductions and pricing. We
want to see an implementation pathway for all farmers being able to enter a collective over time.
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