Andy Loader
Co-Chairman P.L.U.G.
Primary Land Users Group
Open Letter to Government
The Government released their new “action plan for healthy waterways” on the 5th of September which sets out the proposed new requirements to improve freshwater.
But the action plan totally misses the point.
Firstly, we have to acknowledge that the majority of NZ’s income comes from primary products exported across our borders. If we are going to take a big axe to the primary sector then we must expect to feel some severe pain when we fail to find enough income to pay our international debts.
The Prime Minister is on record as saying that in bringing agriculture into the ETS (and working within the water quality restrictions) her government wishes to avoid the traumas of the 1980s when subsidies were removed.
How?
In common with an increasing number of New Zealanders, she seems to believe that dairy farmers can make more money and have less impact on the environment by decreasing their stocking rate.
But the fact is that research published on 11/09/19 by Local Government New Zealand shows that the proposed water quality restrictions on nitrates have the potential to change the New Zealand rural landscape radically.
Applying the proposed 85 per cent reduction in freshwater nitrate levels to the Waikato could see a massive shift from beef and sheep farming to forestry.
And land used for dairying could shrink by 13 per cent.
Forestry would then occupy over 50 per cent of the farmland in the Waikato.
The research was undertaken by a group of scientists and academics from NIWA, Ag Research, the University of Waikato, Dairy NZ and private consultancies.
Vaughan Payne, Chair of the Regional Sector Water Subgroup and Chief Executive of Waikato Regional Council said improving environmental outcomes would have economic and community impacts.
“Our initial work suggests that the economic impacts will be significant and these need to be carefully managed,” he said.
The report was prepared in July, but the researchers had access to the new nitrate limits proposed in the Government’s draft National Policy Standard on Freshwater released last week.
The study focused on the Waikato-Waipa catchment. The Waipa River winds its way for 115 kilometres from the south-east of Te Kuiti to join the Waikato at Ngaruawahia. Its journey takes it through the heartland of the Waikato dairy industry.
To cope with the proposed new limits, the study found that the solution required considerable changes in land use.
In particular, it found large-scale afforestation, particularly of drystock land, would be required.
The area allocated to dairy farming would also fall by 13%, drystock farming would fall by 68%, and forestry land use would increase by 160%.
It said the switch away from drystock farming (beef and lamb) was because the profit per hectare was lower than for dairy farming; thus the opportunity cost of planting a drystock farm was lower than planting a dairy farm.
“The implications for land use profitability are driven by these land-use changes”, the report says.
Combining the change in land use profitability and transition costs gives an estimated annual cost of meeting the new limits in the Waikato-Waipa catchment of around $100 million (or around 11% of the total profits derived from land use in the catchment).
The study also questions whether the focus solely on nitrate and phosphorous levels is the right approach to measuring the cleanliness of streams and rivers.
The problem is centred on what measure is used to define the ecosystem health of a waterway.
The Freshwater Science and Technical Advisory Group, who also reported to Environment Minister David Parker in July, said that five biophysical components contributed to freshwater ecosystem health.
They are
- Water quality — the physical and chemical measures of the water
- Water quantity — the extent and variability of the water flow
- Habitat — the physical form, structure and extent of the waterbody, including its vegetation.
- Aquatic life — and
- Ecological processes — the interactions among aquatic life and the waterway environment
To measure these, the Advisory Group said the Government should improve the current metrics being used in the existing 2014 National Policy Standard on Freshwater.
However, at least in some places, riparian shading, reducing sedimentation, and habitat restoration are also important for ecological health.
Consequently, the cost-effectiveness of policies targeting nutrients is likely to be questionable. A dollar spent on reducing nutrients may be expected to achieve less improvement than a dollar spent on other actions (such as riparian shade, sediment reduction, or stream habitat restoration).
Assuming the available budgets to address these issues are limited, choosing policies that are not cost-effective will potentially achieve less improvement in water quality than other methods.
The whole question of the economic cost of the proposals was under scrutiny in Parliament when Environment Minister David Parker said the overall cost to all New Zealand farmers of the proposals would be between one and two per cent of revenue.
Vaughan Payne, said their initial work suggests that the economic impacts will be significant and these need to be carefully managed.
The total profit estimated to be obtained from land-use declines only by around $7 million per year, but this is because the falls in profits for the dairy sector (of around 7%) and drystock sector (around 40%) are offset by very large increases in forestry profits (190%).
Given that the projected large increases in forestry profits will not eventuate for at least twenty-five years and the costs for development and planting of these forests, it is no more than idle speculation to state that there will be a 190% increase in profit from forestry. Who knows with any certainty what is going to happen twenty five plus years into the future.
This statement is nothing more than an educated guess.
Given that the true flow on effect of the farming economy as calculated by the banks is that every rural dollar is spent at least six times.
As well as the farm staff, a well-run farm employs rural contractors, builders, vets, fertiliser reps etc. and often provides children for the schools, doctors and chemists, as well as team members for local sports teams, and hence custom for the local pub. A classic example of the multiplier effect was shown in the early 2000s when the dairy boom rejuvenated Southland.
From this we can quite easily, using the reduction in dairy farming (13%) & drystock farming (68%) in the Waikato region alone, predict that there will be economic carnage as a result of this haste to introduce new standards without adequate financial analysis.
If these reduction figures were to be extrapolated out across the whole country it is our belief that NZ will be heading into the worst recession we have ever seen.
There will be ghost towns throughout the region as the lack of long term employment opportunities leads to closure of the rural service towns and the shift to the cities thereby exacerbating the problems currently being faced with subdivision of quality soils and development of affordable housing.
The great replacement economic hope of the anti-farming brigade, “Tourism”, is already showing signs of reducing numbers.
If we carry on with the same levels of immigration as at present then the demographic projections will be in the region of 8 to 10 million people by 2050, with probably another 2 million-odd in the northern Waikato region.
There will be a severe shortage of fresh vegetables due to the restrictions placed on any new horticulture operations under PC1.
There is definitely an increasing awareness of the huge environmental and habitat damage done by koi carp even though very little is being done to control or eradicate this pest.
There is an increasing awareness that the towns aren’t doing their part, with raw sewage dumps still permissible and untreated grey water getting into our streams, rivers, lakes and harbours.
Most of the work to remedy the town and city issues is going to require massive amounts of money, leading to significant rises in rates.
So, before killing off an industry, kill the carp first and work with us to improve the waterways without creating ghost towns or communities losing their jobs and incomes.
