23 minute read
Opinion
Opinion
Focus on food rather than hysterics
Alternative View
Alan Emerson
THE old Chinese curse ‘may you live in interesting times’ is certainly applicable today. We’ve had the protest at Parliament removed and not before time. I fully support the actions of the NZ Police, but don’t believe the problem will go away.
We’ve hysteria about climate change, but emissions at source seem largely irrelevant.
There’s the Ukraine crisis, which has certainly provided a bandwagon. We had our Minister of Foreign Affairs jumping up and down and condemning Russia, which will achieve little. A bit like a flea-kicking an elephant’s backside.
That was followed by sabrerattling from Gerry Brownlee and Christopher Luxon. I found that interesting as National was in power in 2014 when Russia invaded Crimea. The silence was deafening.
We had President Biden and PM Johnson making lots of noise, but doing little. To quote the Bard, “full of sound and fury, signifying nothing”.
To be honest, I find little difference from Russia invading Ukraine to the US and UK invading Iraq, not that either event has any justification.
It is an absolute tragedy, as wars always are. At worst, we will have a nuclear conflagration. At best, Helen Clark’s hope of a neutral Ukraine not being part of either NATO or the Warsaw Pact will become a reality.
What is irritating has been the commentary in the media that has lacked analysis.
Ukraine is a huge, wealthy country that was part of the old USSR. Many Russians still live there. Putin wants it back.
It is fourth in the world by total value of natural resources. That includes uranium ore, iron ore and coal. It also has massive deposits of titanium, mercury, manganese and shale gas.
It has the largest arable land area in Europe, with the ability to feed 600 million people. That’s 15 times more than we can.
It is huge in barley, corn, potatoes, rye, honey, wheat, dairy and egg production. Ukraine is also a highly industrialised country that has been courted by the West, which has predictably made Russia nervous.
What’s it all mean for New Zealand? For a start, as there’s not a lot of future farming in the middle of a battle zone, there are going to be considerable international food shortages. In addition, with many supply lines already compromised as a result of covid, the situation will inevitably worsen.
And, as we’re already seeing, the price of fuel will increase with the inflationary pressures that will bring. My cynical view is that whether there are shortages or not, the fuel companies will use any excuse to increase their profit margins
What is more concerning is the suggestion that China could use the confusion as a distraction and flex its muscles in either the South China Sea or Taiwan.
What will NZ do then? Boycott our largest market? Get the Chinese Ambassador in and give him a good ticking off?
My strong belief is that NZ should remain totally neutral. We can praise and condemn but not align. The world needs a solid, independent voice and the United Nations and NATO by their actions have shown themselves ineffective.
NZ politicians jumping up and down with hysterical condemnation is an absolute waste of time that will achieve precisely nothing.
What we need to do is to consider the effects of the Russian invasion and the first consideration needs to be international food supply.
Since the invasion global wheat futures have risen almost 70%, that equates to an extra 33 cents on a kilo of flour. A similar scenario will be occurring with sunflower oil, barley, corn, potatoes and dairy products.
While on one hand that makes agricultural commodities more expensive and profitable, it is going to exacerbate the hunger crisis that currently affects over 800 million people or 10% of the world’s population. Hunger creates dissent.
NZ is an efficient, sustainable and ethical food producer. There are opportunities for us to take the lead.
That is a better use of political energies than the current unbridled hysteria. It won’t be easy, but we can take a lead. Further, it is a constructive effort against destructive rhetoric.
We are better off than most, which puts us in a strong position to take that lead.
We are fortunate in having trade agreements which will survive the current chaos.
The recent FTA with the UK is a quality agreement. It’s the first time in 50 years we’ll have free access to that market.
We have the RCEP and are working on a trade agreement with the European Union.
Finally, we are facing massive challenges with the Ukrainian invasion, the biggest threat to world peace in almost 80 years.
We have a proud record as a food producer and our humanitarian record, including peacekeeping, is strong. That’s where we should be concentrating and not getting drawn into the insane politics of the big boys.
REASSESS: Alan Emerson believes that instead of “hysterical condemnation” of the Russia-Ukraine conflict, the NZ Government should be assessing where it could make that greatest impact to alleviate the pressures of war.
Your View
Alan Emerson is a semi-retired Wairarapa farmer and businessman: dath.emerson@gmail.com
Worst of times brings out best in people
From the Ridge
Steve Wyn-Harris
DON’T you reckon we need something positive this week?
Well, I feel the need at least.
Putin’s violent invasion of a sovereign nation and murdering of innocents recalls Robbie Burn’s quote about man’s inhumanity to man.
This morning’s news was about a maternity hospital bombed killing and trapping women in labour, babies and medical staff.
Our own riots fuelled by misinformation, the pandemic finally getting into our communities causing sickness and disruption, terrible images of our Australian neighbours being hammered by flooding, rapidly rising costs and a host of other things to worry about are dragging us all down.
But there is great stuff happening out there in the world being done by good people.
It’s as if the worst of times brings out the best in people.
Let’s start with the wonderful folk of Moldova.
I wasn’t sure where it was either, but I’d heard of it at least.
Right next to Ukraine to its south and they have opened their borders to allow 250,000 Ukrainians to freely cross to date.
They can barely afford this humanitarian gesture, as the 2.6 million Moldovans are some of the poorest people in Europe.
Moldovans are driving their cars to the borders and collecting refugees and taking them to safety. Others are greeting the frightened refugees with food and hot drinks.
Moldova is also worried about its own fate in this crisis. They wonder if they might be next.
They, like Ukraine, have a breakaway region, called Transnistria, which is a thin strip of territory between Ukraine and Moldova. Russian troops are already stationed there in what the Russians call a peacekeeping force.
Moldova as a post-Soviet state has balanced between East and West but rapidly realising there is no middle ground seeing what is happening over their border. It has quickly applied to join the EU, which might further anger Putin and put them at some risk.
Georgia too has immediately applied for EU membership, but it is a process that can take years.
Poland has also reacted with great humanity to this crisis brought on by this unnecessary war.
The border there has seen amazing displays of kindness and generosity.
I watched a video of an accomplished German pianist who had towed his piano across Poland and was playing at a border crossing, surrounded by intrigued children listening to his surreal soundtrack in that place of refuge.
The Poles have opened their arms to 1.2 million fleeing Ukrainians, with many more coming every day.
Polish families have donated large quantities of food and clothing, which are laid out for the incoming refugees to help themselves.
They are getting the women, children and elderly into buses and ferrying them to centres they have set up to house and feed them.
Others are being offered rides from the border by Europeans who have driven across Poland from their own countries to offer these desperate people somewhere to stay.
The Polish government has set up a NZ$2.5 billion fund to support these refugees, which includes an initial payment and further healthcare and social assistance, as well as housing and feeding them. An extraordinary generous response to Europe’s largest refugee crisis since WW2.
Then there is the exceptional bravery of the menfolk of Ukraine who are staying to fight the invading Russian army. Knowing they are facing overwhelming odds.
Jane asked me what I would do and I had to admit my first thought was I’d hide or run, as I don’t think I have a high courage index. But it would also be exceedingly difficult to take that course of action when everyone else was taking up arms.
And let’s not forget the courage and integrity of the Russian citizens in Russia who at significant risk to themselves are protesting against this war.
Already 12,000 have been arrested and over 20,000 scientists and other professionals have put their names to petitions speaking out against the war in support of people in another country being murdered by their own.
Putin will treat these folk harshly, as one of the contributing factors to the collapse of the Soviet Union were the widows and mothers of dead soldiers protesting against the state.
In these times it is good to know that the world is full of people with kindness, empathy, courage and generosity prepared to help fellow humans in terrible plight from another country.
HWEN caught in crosswinds
The Braided Trail
Keith Woodford
FOUR weeks have slipped by since I last wrote about the He Waka Eke Noa (HWEN) proposals for dealing with agricultural emissions of methane and nitrous oxide. During that time, DairyNZ and Beef + Lamb have been conducting roadshows around New Zealand, trying to convince their members to support the HWEN proposals.
If the HWEN proposals are accepted by farmers and the Government, then this will be the framework for agriculture’s greenhouse gas (GHG) levies through to 2050. So, we have to get it right.
My assessment is that the roadshows are not going particularly well. I make that judgement in part from the flood of emails I am getting from upset farmers, but more importantly because of the fundamental flaws within the current proposals.
I think there is some sort of consensus emerging that HWEN, rather than the Emission Trading Scheme (ETS), is the way to go, although there are dissenters even to that.
These dissenters tend to be people who would like to throw a figurative grenade into the overall process of levying agriculture for its GHG levies. Well, they are unlikely to succeed. One way or another, agriculture is going to be levied.
Like it or not, all major political parties recognise that NZ has to do something to live up to the principles that it signed up to in 2015 at the Paris Agreement. So, one way or another, NZ agriculture is going to be included in an emission reduction programme. It can either be the ETS or an HWEN scheme.
I am very clear that it has to be HWEN. This is because agriculture is a total misfit within the ETS. Being in the ETS would be destructive not only for agriculture but for the NZ economy.
There is a lot of misinformation about the importance of agriculture within the NZ economy. This is in part because of the crazy way we measure the contribution to GDP of what is called ‘agriculture’.
The crazy GDP measurement system assumes that shearers are not part of agriculture. Nor are any of the contractors that supply farm-level services to farmers, such as silage contractors or crop harvesters. Inputs such as seed and fertiliser are regarded as costs which are deducted from agricultural revenue in the calculation of GDP. Similarly, all rural professionals are excluded from agriculture’s contribution and included as part of the services sector. Fonterra and the meat companies also lie outside the sector.
Some clever Americans at Harvard University figured out way back in 1957 that the way to look at agriculture’s contribution was to look at the whole agribusiness system from inputs through to the plate. But here in NZ, many people are still locked into ways of thinking that go back to peasant-farming days in Europe, when a large proportion of people worked on farms and the economy could be divided into three simple categories of farm-based agriculture, manufacturing and services.
To understand the importance of the agribusiness sector, or as I often term it the agrifood sector, we have to look at the whole system from farm inputs through to the plate.
Within our current crazy system of collecting and presenting statistical information, the best way of getting an insight into the overall NZ agribusiness system is to look at exports. What we see is that primary sector exports, including forestry and fishing, total around $50 billion per annum. Returns have been steadily increasing and now total well over 80% of total exports.
Within this $50b, more than $30b comes from dairy and meat.
Quite simply, our primary industries, and particularly dairy and meat, are what underpins our whole economy. These are the products that allow us to pay for vaccines, medical equipment, pharmaceuticals, fuel, computers, vehicles and machinery.
Accordingly, NZ needs to think very carefully before it brings in levies that destroy our economic base.
A key element of the Paris Agreement is that although we must reduce our emissions, we must do this in a way that does not threaten food production. That is very explicit and right upfront within lines 9-11 of the substantive statements that follow immediately after the preamble and definitions.
That requirement within the Paris Agreement does not let us ‘off the hook’ from doing something about emissions, but we have to do it without shooting ourselves in the foot, or perhaps shooting into even more important organs of the body.
That leads me to a perspective that there are fundamental principles within HWEN that almost all of us should all be able to agree with. However, I am also of the view that the current HWEN proposals are somewhat of a dog’s breakfast when it comes to the specifics. A lot more work is going to be needed on those specifics to bring them into line with the fundamental principles.
So, what are the fundamental principles? There are four of them.
The first principle is that there must be a split-gas approach. Lumping things into a singlegas approach of carbon dioxide equivalence leads down a deep rabbit hole from which there is no way forward.
The second principle is that what we do must not threaten food production. That is what we signed up for in Paris. The particular value of NZ’s pastoral production is that it is protein rich. That also happens to be why its dollar value is high. It is what people want.
The third principle is that levies on methane and nitrous need to be channelled exclusively to researching and implementing emission-reduction technologies. The aim is not to arbitrarily tax agriculture. Rather, the aim is to have the necessary funding for addressing our Paris commitments to reduce emissions within that framework of not threatening food production.
This principle of recycling of all levies is currently a proposal, but it now needs to be locked in with the Government.
The fourth principle is that HWEN needs to focus on the ‘main game’, which is methane and nitrous oxide. Anything to do with carbon sequestration should be handled within the ETS.
One of the problems with the specific proposals is that there is far too much emphasis on sequestration within HWEN. This drags things back into the mess of carbon dioxide equivalence and away from a genuine split-gas approach.
Currently, there are anomalies within the ETS in relation to sequestration. Also, the bureaucracy associated with getting a lot of indigenous forestry into the ETS is destructive. But the answer to that is to sort out those anomalies and bureaucratic hurdles, not put forestry into HWEN.
Those sequestration issues in the ETS can be handled right here in NZ, without going anywhere else in the world seeking approval, as long as the ETS retains carbonsequestration integrity.
In contrast, shifting aspects of sequestration across into HWEN simply means that instead of being issued with valuable NZUs, it becomes a case of robbing Peter Farmer to pay Paul Farmer, and with both Peter and Paul paying for lots of administration to make that happen.
What we now need to do is lock in those principles. That could mean Groundswell, for example, agreeing with HWEN that this is the path forward and putting out a joint statement to that effect.
The next step is that HWEN needs to acknowledge that the current proposals are somewhat of a dog’s breakfast, although no doubt HWEN will prefer some more polite language for that. And the following stage of getting the proposals sorted out needs to be more inclusive, with less focus from HWEN in selling the specific proposals, and more on genuine ongoing consultation with leaders from groups who are currently unhappy.
The significant group of people who are outside the tent need an invitation to work with recognition from inside the tent. This would be consistent with the meaning of HWEN, which is that ‘we are all in this together’.
One of the big things that has to happen is for HWEN to ask itself some hard questions about the amount of necessary RDE&E, with that acronym standing for research, development, extension and education, that is required for emission reduction within an industry that generates $30b of export income per annum. It certainly needs to be more than the current indicative figure of $10 million per annum.
It is this RDE&E, and the associated support of specific mitigation responses, that needs to be the focus of HWEN funding.
I had planned to also say something here about the various mitigation strategies that need to be focused on through RDE&E. But that will have to wait for another article.
COMMITMENT: If the HWEN proposals are accepted by farmers and the Government, then this will be the framework for agriculture’s greenhouse gas levies until 2050.
Your View
Opinion
UK deal offers greater flexibility
Meaty Matters
Allan Barber
THE Free Trade Agreement (FTA) with the UK signed at the beginning of this month is a significant advance on current access rights to one of the world’s most important markets to which New Zealand exporters have had restricted access since 1973. When Britain joined the Common Market, NZ retained rights under WTO rules to export a large volume of duty-free sheepmeat, but precious little else, unless it incurred a substantial tariff.
Following ratification by the respective parliaments, likely before the end of this year, suppliers of all sorts of products and services will be entitled to sell without tariff and quota restrictions. For obvious reasons meat and dairy are the exceptions, although both of these have a transitional period during which increasing volumes will be granted free access until they too can compete on a completely even playing field.
An independent economic modelling report forecasts up to a $1 billion increase in NZ’s GDP as a result of a more than 50% rise in exports to the UK over time and substantial savings in duty payments. Duty savings are somewhat hypothetical, as they are paid not by the exporter, but by the buyers who must assess their effect on the price of the goods in their buying decision.
Products which stand to benefit from the new arrangements are butter, cheese and beef, which till now have been almost totally excluded by very limited quota and high tariffs, as well as a range of other agricultural goods, including wine, honey, onions and hoki.
Since 1973 Britain has imported most of its dairy products from the EU at zero duty, while over 90% of beef imports have been of EU origin, mostly from Ireland. Last year NZ supplied less than 1% of UK dairy imports totalling $4.6 million, of which two-thirds was infant formula, while the beef quota was a mere 424 tonnes, incurring a 20% tariff.
This state of events is not suddenly going to change dramatically as soon as the FTA has been ratified, because building business relationships will take time; UK buyers already have their preferred suppliers and NZ exporters must satisfy existing customers. Eventually money talks and products will find their way to the highest paying markets, but it will take time for the parties to trust each other and for buyers to be confident that what they decide to import can be delivered on schedule to their customers’ satisfaction.
But it will also rely on marketing programmes to inform British buyers of the desirable characteristics of NZ beef and dairy products, although older consumers will remember our butter, while a broader cross section will certainly know our lamb.
I anticipate the meat exporters already supplying sheepmeat to UK retailers and foodservice companies will be more prepared to take advantage of their established trading relationships to up their beef business. The duty-free quota in year one has been set at 12,000MT, rising to 38,820MT by year 10 and 60,000MT by year 15. These volumes should be compared with annual beef exports to China and the US, which are between 160,000 and 190,000MT each, while none of our other main markets – Korea, Japan, Taiwan, Canada – exceeds 30,000MT. The quantity of exports to the UK will depend on how competitive prices are, how badly they want the product and whether our exporters can or want to satisfy their demands.
Silver Fern Farms chief customer officer Dave Courtney welcomed the new FTA, noting while tariff reductions were relatively small, it would provide greater options, especially for beef where SFF had been unable to build any enduring relationships. “The FTA gives us the opportunity to put beef in front of existing lamb customers in various channels, from foodservice, manufacturers and retail. This will bring a broader range of NZ products to discerning consumers,” Courtney said.
Anzco’s Rick Walker agreed the FTA will provide a great opportunity for beef which did not previously exist, but warned against expecting too much in the short-term. He sees the greatest potential in developing foodservice sales to the high-end restaurant trade through food processors and distributors which focus on that end of the market. The other market segments, retail and food ingredients, offer less opportunity because retailers have made a big push into British origin beef and lamb, while food ingredients tend to be more pricedriven, with that market wellserved by Irish exporters. Anzco is currently looking at the costs and benefits of investing in UK market development when compared with existing markets.
Affco’s Mark de Lautour echoed the belief the FTA contains relatively small benefits for red meat exports, especially sheepmeat, which comes nowhere near filling its existing quota. While he welcomed anything that boosts international trade, he noted the broad political view in NZ appeared to target decreasing livestock numbers at the expense of carbon farming.
Dairy exporters will face similar issues when looking at developing sales to what is essentially a new market, albeit one with huge potential. The UK imports around $7b of dairy products annually and is the world’s second-largest dairy importer, with a 77% milk self-sufficiency level. It imports approximately half a million tonnes of cheese a year, a quantity 50% larger than NZ’s total exports. Most of the imported dairy product comes in duty-free from the EU.
Fonterra is in the very early stages of looking at the opportunities, although it is too early to say which specific products have the greatest potential. Their PR spokesperson said the company’s long-term goal was to grow foodservice and high-value ingredients, although global branded products may also offer opportunity.
In summary, the FTA is a positive step forward, but is not considered likely to produce much immediate gain for the meat and dairy sectors.
SAVINGS: An independent economic modelling report forecasts up to a $1 billion increase in NZ’s GDP as a result of a more than 50% rise in exports to the UK over time and substantial savings in duty payments.
Your View
Allan Barber is a meat industry commentator: allan@barberstrategic. co.nz, http://allanbarber.wordpress. com
LETTERS More letters P32
sufficient quantities to cover the increased demands.
But there are two main problems with this scenario: the Bluff smelter has yet to shut down and there is no transmission infrastructure available to direct that supply to the North Island where the demand is the greatest.
But here in New Zealand we have another option that will allow us to keep the lights on without the need to import dirty coal from Indonesia.
Instead of filling our landfills with waste, we can use that waste to produce power by incineration. Given the latest technology available, the relatively simple engineering needed to transform the Huntly Power Station to use waste, the availability of area for the processing of the waste, the existing transmission network and the existing rail network into the site, there will be less harm done to the environment from using waste as a fuel than there is from importing and using coal.
According to the waste hierarchy framework, the recovery of energy from waste is the next preferred method after recycling. Disposal to landfill is the least preferred method of waste management, yet it is the current best practice in NZ.
The Auckland region produces approximately one and a half million tonnes of waste a year that mostly goes into landfills.
The Government has committed to stopping the use of fossil fuels and converting to electricity use instead and given this focus on the use of electricity to replace the use of fossil fuels, the demand for electricity is going to increase exponentially.
NZ currently does not have the capacity in sustainable generation of electricity to stop the use of thermal generation outright.
If the hydro lake levels drop significantly due to weather effects and the wind doesn’t blow at that time, then we will need to rely on thermal generation or see rolling blackouts as happened in August 2021.
There is another option that should be explored as soon as possible and that is to use incineration of waste to fuel power generation, rather than using imported coal.
By using waste incineration at Huntly Power Station we can achieve the following benefits: reduce the amount of waste going into landfills and reduce the methane emissions from landfills accordingly; with the new incineration technology available we can reduce the amount of greenhouse gas emissions of thermal generation from coal burning; utilise the existing supply infrastructure into Auckland, the largest market; and gain time to develop the sustainable generation capacity from wind and solar without the need for rolling blackouts.
We have the capability on government-owned land, where the infrastructure could be sited to accommodate the sorting of the waste streams into separate recyclable and incineration resources.
There are no reasons not to use waste incineration when compared to the environmental effects from burning imported dirty coal.
Let’s stop the lights from going out.
Andy Loader
Primary Land Users Group
