Farm businesses not excluded from ETS

Factual details for editors

Farm businesses not excluded from the Emissions Trading Scheme (ETS)

Some media are reporting the latest revision to the ETS as ‘the Government excluding farmers from the Emissions Trading Scheme until 2015’. This is factually incorrect.

It is vital for accuracy to refer to the 2015 delay as applying to biological emissions only (methane and Nitrous Oxide from livestock and soils).

All New Zealand farms and orchards have been in the ETS since 1 July 2010.

We wish to counter a belief among some media that farmers do not pay the ETS on farm inputs or that farmers somehow receive a rebate. Both these assumptions are incorrect.

Like all New Zealand businesses, farms pay the ETS on fuel and electricity they directly consume. They also pay it indirectly through the supply chain on things as diverse as processing costs, animal remedies, wire netting, fencing, feed and fertiliser. Indirectly, it also affects the cost of professional services farmers consume too.

There are few exemptions to the ETS and apply mostly to international air travel and international bunker fuels to and from New Zealand.

The cost of the ETS on dairy, horticulture, sheep, beef and deer:

The cost impact of the ETS on dairy, horticulture, sheep, beef and deer farmers is conservatively estimated to be a minimum of $106 million per annum:
Fonterra Cooperative Group estimates its individual dairy farmer suppliers directly pay $3,700 a year in carbon costs for fuel, energy and their share of the carbon costs being paid by Fonterra for processing emissions (approximately $38.8 million per annum).
Beef+Lamb NZ, Meat Industry Association & Deer Industry New Zealand calculated the individual cost on sheep, beef and deer farms of the ETS, to be $2,000 per annum (approximately $27.8 million per annum)
HortNZ, in its 2011 submission, highlighted smaller greenhouse glass operators facing additional ETS related costs of $30,000 per annum. In 2008, it estimated the ETS would add industry costs in excess of $40 million.

These compare to typical households paying additional ETS related costs of around $133 per annum. It should be noted that many farms and orchards are households too.

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