By Rebecca Howard
July 25 (BusinessDesk) - DairyNZ says a planned methane reduction target will set farmers up to fail and that the proposals need robust economic analysis.
The Climate Change Response Amendment Bill proposes that gross emissions of biogenic methane be cut by 24 percent to 47 percent below 2017 levels by 2050.
“Farmers want to do what is right. They are ready to go on this journey, but they need a fair target that they can buy into. A 47 percent methane reduction target is simply setting farmers up to fail, if the tools are not available,” chief executive Tim Mackle said in a written submission on the bill.
DairyNZ proposes the target be anchored at no more than 24 percent, and be regularly reviewed against robust criteria.
According to DairyNZ, as it stands the proposed 2050 target range has the potential to significantly increase compliance costs for dairy farmers.
It estimates dairy farmers' total profit would reduce by between 34-42 percent across the 2020-2050 period. “This is a substantial loss in income and is more than 10 times higher than the cost of $2,500 per farm estimated in the regulatory impact statement,” it said.
Overall, it says the regulatory impact statement contains “little data” regarding the financial impact of the bill on the dairy sector.
“An absence of comprehensive economic modelling is concerning because the costs of the alternative methane targets appear too low at the national, sectoral, and farm levels,” DairyNZ said in its submission.
It also warned the increased compliance costs may end up promoting the success of other countries where they can produce milk more cost-effectively, hurting New Zealand’s competitiveness.
Overall, requiring such a marked reduction in methane emissions will likely lead to lower production levels and the gap will likely be filled by other global producers, it said.
Submissions on the bill closed on July 15 and it is now before Parliament's environment select committee, which is due to report on Oct. 21.