New Zealand’s Red Meat Processors And Exporters Call For Changes To Emissions Pricing Proposal

New Zealand’s red meat processing and exporting sector is urging the Government to make changes to its agricultural emissions pricing proposal.

The Meat Industry Association (MIA) rejects the Government’s proposed interim processor-level levy, wants changes to the emissions price-setting process, proper recognition for genuine sequestration happening on New Zealand’s sheep and beef farms, and levy relief for those farmers disproportionately impacted by emissions pricing.

“The red meat sector has a role to play in addressing climate change and we support an approach to pricing that would reduce emissions but not at the expense of massive production losses and hurting rural communities,” says Nathan Guy, chairman of MIA.

“The He Waka Eke Noa Primary Sector Climate Action Partnership’s recommended proposal was carefully calibrated to ensure that disproportionate impacts were minimised across sectors, particularly for the sheep and beef industry.

“However, the Government’s proposed changes have upset this balance. If implemented in its current form, the Government’s proposal will have devastating consequences for the red meat industry, rural communities, approximately 92,000 red meat sector jobs and New Zealand’s food production and export success.”

The Meat Industry Association and its members have closely examined the Government’s emissions pricing proposal, says Mr Guy.

“The proposed interim processor-level levy would be ineffective, inequitable and complex. The agriculture sector should also have a direct voice and seat at the table in advice and decisions on price-setting, incentive payments and revenue recycling.”

The industry is calling for the introduction of transitional levy relief, which is particularly important for sheep, beef and deer farmers whose only mitigation options readily available are destocking or afforestation, and will ensure viability while they transition to lower emissions production.

“The processing and exporting industry also believes that if farmers’ emissions are to be priced, it is only fair they receive genuine recognition for the sequestration happening on their farms to manage the impact of emissions pricing.”

MIA supports a cautious approach to methane pricing that must include the impact on rural communities, as well as food security and emissions leakage considerations, says Mr Guy.

“A delegation from MIA recently met with Prime Minister Jacinda Ardern, Ministers and senior officials to discuss our differences and propose workable solutions.

“As a He Waka Eke Noa partner, we welcome ongoing talks to ensure any future Government decisions have been road-tested with primary sector leaders first to get this delicate balance right. Any final solution needs to be enduring and protect rural communities.”

Sirma Karapeeva, chief executive of the Meat Industry Association, says processors are concerned that a drop in production due to emissions pricing would contribute to emissions leakage offshore.

“The Government’s own modelling indicates that for every 1.6 million tonnes of emissions reduced from sheepmeat, there is 2.1m tonnes leaked globally. This equate to 133 per cent of New Zealand’s emissions being leaked and contributing an increase in global emissions.

“Given global demands for protein continue to rise, a gap left by a drop production in New Zealand would be filled by less efficient producers, undermining global emissions reduction goals.

“New Zealand farmers are highly efficient food producers and recent research shows that our beef and sheepmeat sector is one of the most emissions efficient in the world. Our on-farm carbon footprint is half the average of other comparable countries.

“We want to protect and grow this production system while at the same time playing our part in reducing greenhouse gas emissions.

“New Zealand’s meat producers have a reputation for high-quality, safe, and nutritious food. We have high animal welfare standards and are a trusted producer. This is something New Zealanders should be proud of, celebrate and support.”

The Government’s modelling suggests a 20 per cent drop in red meat production, which would have a significant impact not only on individual farmers but also the communities they live in, she says.

“A 20 per cent reduction would mean reduced processing volumes, jeopardising export receipts as well as employment in rural communities.

“The sheep and beef sector contributes nearly 92,000 jobs nationally, and $4.6 billion in household income. In some regions, the sector accounts for 10-12 per cent of the regional economy and employment.

“The reduced production due to livestock availability or land-use change means higher unit costs for processors, affecting long-term profitability to the extent where consolidation or closure of plants would have to be considered.

“This will affect jobs, wages and salaries, expenditure and consumption, property values, availability of amenities and hollow out rural communities.”

The meat processing industry has a comprehensive decarbonisation programme underway and has committed to reducing and eliminating the use of coal by 2037, says Ms Karapeeva.

“Our decarbonisation projects will remove over 1.8 million tonnes of emissions over their lifetime – that is equivalent to removing over 32,000 cars from our roads.”

The MIA submission is available at https://www.mia.co.nz/assets/Uploads/22-07-MIA-Submission-to-MfE-on-Pricing-Agricultural-Emissions-FINAL.pdf

The HWEN submission is available at: Final-He-Waka-Eke-Noa-submission-18-Nov-22.pdf (hewakaekenoa.nz)

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