Government Must Stop Subsidising Intensive Agriculture

Peter: You’re right. And I think Geoff and I do agree on a lot. My key points are about how we present our position and the important role of non-price methods to stop environmental degradation. Regulation (such as setting standards) and other behavioural change methods are often more effective and lower cost for everyone. The circumstances where pricing is the best tool for the job are quite limited. (And my point about urban issues is purely about being consistent: the same issues arise there.)
One area where I think pricing can be used more is where water extraction rights have been fully (or over) allocated. In that situation I think charging makes a lot sense. This has been discussed for years and there are some practical difficulties (and possibly Treaty issues) but as demand grows charging looks increasingly attractive to me.
Narena: you’re right too. And I did not know that about clover. Thanks.

I’m not sure Geoff and Richard are that far apart. Yes, sure it can’t be all about economics but you can’t privatise the profit and socialise the cost either. Unless you price costs to the polluter you will never send the right signals. One of the reasons why farmers are locked into a commodity cycle around milk powder is they voted for it. They wanted Fonterra to stick to its knitting and not seek out fancy higher value product streams as that would see higher levies imposed. Of course it needs to be a blend of the two but the way it stands at present the signals are all about more milk. I don’t disprove of intensive agriculture but there are places where it can be done well and there are places where it can’t be because of climatic or physical soil limitations or that farmers are trying to maximise production out of kilter with what is possible environmentally. Can technology and innovation help, sure, but often it is the good managers who do it best and we know there is a long tail behind them. So what do we do with those where its physically impossible for them to stay within limits or are either unable to, or don’t want to change? Do we give those farmers a free pass? As Richard said, there’s no easy answer or magic bullet but you have to take a step back and say, what can this catchment sustain and if it means changes in the intensity of farming then somebody is either going to have to pay for it or you find a way to do it differently and still do it profitably. If you’re a business and tide turns agains you, the government doesn’t usually give you a cheque to help you out, barring natural disaster, it expects you to reinvent or find a solution otherwise you go broke.
Do urban dwellers have an obligation to sort out their environmental performance, of course they do but I’m not sure the issues are linked. I’m not taking something from farming to use for my private benefit and asking them to pay for it. There are always double standards and I would just as happily see moves to make sure we send the same signals to reduce waste or use resources more efficiently but we do need to get farming on the right footing and to be our shining light and point of difference. We won’t get there by winning a race to the bottom with other cheaper suppliers.

Just one comment about Richard’s excellent contribution relating to farm extension services. As far as I am aware independent scientific advice to farmers went with Roger Douglas. Fonterra tells farmers what to do or paid farm consultants. NZ pastoral farming used to be sustainable, being based on rye and nitrogen fixing clover, promulgated by agricultural extension services. You wont see clover in dairy pasture. Nitrogen suppresses it.

Good grief, this article is like a time warp. It lumps related but different issues together and frames them in the economic rhetoric of getting rid of subsidies for agriculture, like a throwback to the 1980’s. I am not anti-economics but surely we can do better than this.
We do need to lift our game environmentally, not just for intensive agriculture, but across the board. And in doing so we can also lift our economic performance. So why not frame it in terms of the outcomes we want, such as environmentally sustainable agriculture or making NZ genuinely clean and green. And then think seriously about what would actually make the difference towards that.

There are three reasons why Geoff’s article riles me. First, how we frame the issue determines how we resolve it and how people react to it. Framing it as an economic issue takes you down a path that is simplistic, ineffective and ultimately an expensive way to achieve outcomes. It says if they pay, its ok. So what is the price you expect farmers to pay? And how do they pay? There is no market for these types of costs and adding taxes or charges to polluters may create incentives to reduce pollution but it does not remove it. In fact it legitimises polluting because whatever residual pollution occurs has been paid for.
Reducing pollution requires people to do things differently, ie changes in behaviour. Emphasising economic incentives (removing “subsidies” or pricing pollution) ignores the other real world influences on behaviour.
The way we behave (even in markets) is far more socially normative than economically rational. In the case of changing farm practices there is a mass of literature dating back to the 1930’s where farming practices in the US created the dust bowls despite the known evidence that it would lead to economic disaster. This lead to farm extension services, the lessons from which are still relevant to today’s issues here in NZ.

My second concern is the article implies this hotchpotch of issues has an easy solution – remove the “subsidies” to get the incentives right. These issues are not all the same: they need to be unpacked and subject to more nuanced responses if we are to have any credibility.
For example, the contamination in Hawkes Bay could have occurred with any farm animals being present in the area, intensively farmed or not. It is a serious issue and there are lessons which every district and regional council in the country will need to learn, both as owners of water supply infrastructure and as the primary regulators of land use and water quality. Let’s look at how to stop it happening again rather than a knee-jerk reactions to ban intensive farming. Implying intensive agriculture leads to soil loss is another example of a blanket statement that masks the truth and undermines credibility. Intensive agriculture can reduce soil loss. In flatter eastern areas, such as Canterbury, wind erosion used to be the greatest source of soil loss. The irrigation associated with intensive agriculture means there is now greater ground cover (more grass) reducing the susceptibility to wind erosion. In my experience intensive agriculture does not typically happen on steeper hill country.
Of course there are serious issues with intensive farming. Nitrogen leaching in groundwater can take years to show up and generations to remedy. Biodiversity loss from intensive farming is an issue you didn’t mention. This is not just in relation to water quality but a reduction of terrestrial biodiversity through cultivation of areas not previously ploughed over or irrigating in areas adjacent to dryland ecosystems. Similarly, I totally support bringing NOx from agriculture into emissions trading because, unlike methane from stock, this can be better controlled through good management practice. Other commentators have identified other issues such as the way we allocate water, or the use of PKE.
My point is that each of these issues are different. They are not simple and there is certainly no silver bullet. So don’t put them all in the same kete and pretend we can some solve it by making farmers “pay the full costs”.

My last concern is the tone of the article feeds urban-rural polarisation, characterising farmers as free-riders , while urban dwellers (myself included) live different but also unsustainable lives. Where is the consistency in addressing urban issues? We do not pay the full environmental costs of our waste for example. As consumers very few of us put our money where our mouths are to buy organic produce. And the full cost of transport has been estimated as several times what we currently pay in fuel taxes. If TOP are going to take this economic high ground approach to intensive agriculture, will TOP also advocate for quadrupling fuel prices to reflect the ‘subsidy’ of road crashes and transport related environmental effects?

We do need to raise the bar. It will require leadership and pushing boundaries. But let’s be smarter about it, moving beyond 80’s ideology to develop responses that help people make the changes, rather than alienating them.
Apologies for breaking rule no.2 but I have tried to keep it relevant.
Richard

I don’t know James how good those numbers are but the impact of livestock on water issues and emissions is huge. I can see a future with vertical farming and cultured meat and milk. Maybe pie in the sky stuff and the resistance would be huge but we can surely talk about it. Certainly the numbers of vegans is increasing and even I am an on and off vegetarian. But we could make a start with taking many hill country farms out of the equation. I know a lot of them haven’t made any money out of farming in thirty odd years at least, depending on their wives working off the farm, a bit of tourism, homestays, and bees oddly enough. They simply cannot afford to fence streams, hence the laughable gumboots rule.

As an aside, welcome, the third, or is it fourth, industrial revolution.

James – I could definitely live with that. My wife and I are not eating a lot of meat anyway, and we could easily reduce it even further, to a treat every once in a while. Same with milk – we like it a lot in our coffees, and as an ingredient in the odd baking recipe, but we could easily reduce that, too. Wouldn’t be a loss of quality of life to us.

Some rough and ready numbers. The biomass weight of wild terrestrial animals = 55,000,000 tonnes. The biomass weight of humans = 550,000,000 tonnes. The biomass weight of animals managed by humans (livestock for the production of meat and milk) = 5,500,000,000 tonnes. The plague on this earth is livestock. We can live without them. In NZ we have to learn how to economically survive without them. Without livestock, we will be healthier, forests will grow, endemic species will thrive, water will run clear and global warming gasses will be diminished.

how misleading this is, who said that is an intensive farm, where are the animals? A few here and there and clearly not intended for very long as there is little to sustain them . They look remarkably like beef animals but still I think your assertions are wrong.
You might like to consider the pollution of dead animals in your clean water streams after a 1080 drop – that is fully sanctioned by the government.
This is infinitely worse than any dairy farm however if you see one which you think is not playing by the rules then report it. there are rules and regulations. there is a court action against this council and while sheep have had the finger pointed at them but not substantiated, dairy has not so poor example.
Agriculture is well aware and doing more than any other country to mitigate any emissions that may arise from it. Remember your own contributions, please many of them are in our water and on our land.
As for chlorinating Christchurch water, leave it alone and look around the cropping lands and identify “blue baby syndrome” that is an issue and it does not come from dairy cows. sssssh don’t tell the mothers living in and around Ashburton.

Hi Greg, I have read your comments, I am not against dairy farmers . I wish they would look after their farm land and waterways in a sustainable way. Profit seems to be their only creed, encouraged by Government , who take a slice of the pie.

A cost analysis needs to be done, both on dairying and hill country farming.

I sympathize with Gary Pauley. We need to keep talking and finding a way through all of this. Farmers will feel threatened but we must not drive them into the arms of the ideologues, the likes of the Koch brothers in the States who have cruelly manipulated the blue collar workers.

I’m inclined to think, on anecdotal evidence, that most hill country farming returns very little to the NZ economy and advocate that it be returned to the birds and bees. This retired farmer might be described as an ultra green – I follow EO Wilson’s desire to see half the planet returned to wildlife. We might entertain the idea of employing hill country farmers as custodians of their land for the benefit of our wildlife and the nation as a whole. I’m sure they might earn more from tourism.

Please keep it factual and objective. I don’t think anybody suggested to abandon dairy farming – but it feels like taking the intensive component out of it and making sure it’s sustainable, unsubsidised and in harmony with nature might be the right way of approaching it. Right-size instead of maximise. I’m no farmer and definitely no expert, but I’ve seen and read a lot of good reports by now where farmers of any kind ditched the intensive and output-maximising way of farming in favour of a smaller, more quality-focused, manageable and sustainable way, and consumers are actually honouring it and willing to pay a fair price for the better goods (I know I do). You might not be able to make millions that way, but you might be able to live happier and healthier.
As it is the case with so many things these days, we just have to learn and force ourselves to stop thinking in terms of infinite growth and producing more and more and fooling ourselves that there will always be a demand to meet that growth. We tend to go for the extremes and squeeze more and more output and money out of our businesses, but getting there takes exponentially more effort and resources and causes equally more damage than keeping it balanced.

Wow looks like the majority of this board think we should abandon dairy farming, not sure if I’ve seen any suggestions to replace the 30 billion it earns NZ however as suggested in the Top way blog I will desist from further posts on this as suggested once you encounter someone with an intractable position.

Enjoy your soy lattes
Yours

The Climate change denier

Wow looks like the majority of this board think we should abandon dairy farming, not sure if I’ve seen any suggestions to replace the 30 billion it earns NZ however as suggested in the Top way blog I will desist from further posts on this as suggested once you encounter someone with an intractable position.

Enjoy your soy lattes
Yours

The Climate change denier

Completely agree Geoff (although you forgot to mention the use of PKE as a feed additive, and the vast amounts of coal required to dry milk to powder, among other things).

Then there’s the issue of all these subsidies being capitalized into ever-increasing rural land values (on which no capital gains tax is paid), with many farmers seemingly totally reliant on capital gain and unable to generate surplus cash from running their business…….can I suggest that there is an analysis to be done by you guys looking at the long-term viability of dairy as an enterprise (even before adding the cost of externalities/subsidies)?

As for climate change, it is about science not beliefs. It is a fundamental part of the scientific method that all hypotheses and theories must be tested against observations of the natural world rather than resting solely on a priori reasoning, intuition, or revelation. The overwhelming evidence is for human induced climate change. Any good scientist leaves open the possibility that contrary evidence may emerge. It is the nature of empiricism. Can we afford to wait until “time will tell”?

Thank you Peter Carey for the clarity of your thinking.
And then there are drains, open farm drains, underlying waterways, which are also not fenced or protected from farm runoff. Some of these drains are very large and may drain significant swamps as are found in the Bay of Plenty. With the heavy application of nitrogen in the 1990s, these drains become dead and fetid within months. Frogs, the Australian bell frog disappeared, along with bittern (now endangered) and kingfishers. Eels became the benchmark for determining if there was life in these drains. Numbers of ducks, mallard, Pacific, and the hybrids were severely reduced by avian botulism – did you wonder why Fish and Game were so hot after dairy farmers? What cost do we put on this and who pays?

Guys, please talk politics the TOP way and don’t get personal (see their earlier blog post how to do that). Thanks.

Reply to Peter and Carey comments

Peter the major claim in this article is incorrect therefore the remainder of its assertions are equally erroneous as they rely on a falsehood.

You commentary is full of assertions which are neither backed by facts or evidence and are some what biased to the “dirty dairying fraternity”. Whether you have “Faith” in such things as political will is irrelevant if regulations are in place they are in place. Likewise your comment regarding famers not doing what they say demonstrates your bias against dairying.

I am sure Winston will welcome you with open arms regarding processing and added value, don’t you think the industry is trying to optimise its returns against its capabilities or is it as you infer trying to sub optimise farmer returns. You demonstrate as much knowledge about the industry as Winston.

I live in Marlborough and believe me they are pouring on insecticides\fertiliser etc at the moment so not sure what your definition of tiny is.

Lastly global warming is the latest in a long line of “chicken Little” Doomsday scenarios, you know the fix is in when the large accounting and legal firms dedicate departments to it. Don’t worry when is a few years the sky hasn’t fallen in there will be another Doomsday scenario for you and the other climate change groupies to fret about.

Sincerely

Climate change denier

I am ashamed driving past dairy farms now and see the huge tracks of land where a mob of cattle have been, totally degraded. What a lovely image for our tourists. Rivers you can no longer swim in. bird life and animal life dwindling with their loss of habitat. The clean green image was always emotive, but now is a lie in many areas.

In reply to G Pauley comments:
The source of the contamination may well be as you say but the risks to water of contamination from feedlots and intensive dairying are increasing and they are also the more likely users of the new irrigation schemes. Councils may well impose new nitrogen caps but when farmers are told they are going to have to cut back on half their stock their squealing may well be audible from the Auckland Islands. I’m in Canterbury where these have been set but I don’t have much faith there will be the political will to impose them when the government has its own people in there. Fencing of waterways is improving (but its nowhere near 99% yet) but this is only one source of the problem. Runoff and leaching of nutrients and faecal contamination is the bigger and more difficult problem to solve, particularly in storm events. If we have to chlorinate our water in Christchurch because of rural contamination the backlash from the urban population will be what rural folk will have most to fear.
As it stands currently, there is no proscription of dairying in any catchment, if you set a plan to do the required limit you can dairy farm. Unfortunately, nobody is adding up these farms’ nitrogen losses and saying we have to stop now. We also know that what farmers say they are going to do and what they actually do aren’t necessarily the same (just like everyone). Yes there is a lot of research occurring to try and reduce these nitrogen and other losses but often its still directed to maintain the same level of production, which suits Fonterra but not necessarily the farmer. As milk prices increase again we can expect more pressure to go on to increase production. I work in mitigation of N losses but if I can do this by 25% but double the number of cows, we’re still losing. We need more balance in our farming and if that means a bit more regulation then so be it, its in farmers’ hands to move away from just being commodity suppliers to producing more added value and specialised products.
A few last points, there is no charge for water of any consequence, only the scheme infrastructure that provides it; yes there are issues from other sectors like horticulture but these are often a lot smaller in size and there are strict standards about what they can use and when, otherwise no exports. Chemical use has decreased a lot in horticulture/viticulture in the last 20 years. Their fertiliser use is tiny compared to dairying and their environmental impact is probably minimal. Unlike dairying they realise there’s value in being more green. Lastly but not least, global climate change is not unsettled, its real and you can argue about how much is natural and how much is man-made but if i was a betting man I’d say its standing at 99-1 against it being remotely natural. Most people would take that horse. Climate change is only unsettled in the same way that some people think the moon-landings weren’t real.

Totally agree that resource users should pay the costs. The current situation of first in best dressed with water is nuts. A public good like this should be paid for at its marginal value when used for private benefit. If that means you go out of business because someone else thinks the water you want is worth more, welcome to capitalism. We should use the same process for other public resources like fishing quota. Lease it annually based on the total allowable catch rather than the ridiculous situation where people own a chunk of the quota as it sits now.
Climate change is a global problem is it not? If that is the case the reactions need to be global. If the emissions created by people as they consume are the issue and need to be controlled we should be aiming at encouraging people to consider the emissions of their consumption. What about something like GST but on a carbon equivalent basis. It’d need to be a global scheme to actually have a global impact which probably means it will never fly. It would overcome the insane idea that by reducing food production in NZ we could help the climate when all that would happen is someone would produce the food elsewhere and my understanding is that our pastoral products are relatively low in emissions compared to more industrial farming overseas. This would also mean that the rich would naturally pay much more as they consume more.
If we can’t get a global version going why not adopt it in NZ like we do for GST. Any imports pay the carbon tax at the border and exports get theirs back. This would mean NZ’ers consumption habits would be paying for their carbon emissions rather than our production.
The current international processes to address carbon are not working and probably never will.

Or a climate change groupie

“Secondly 99+% of waterways on Fonterra farms are fenced from waterways " My information may be out of date but I thought only waterways that flowed over the top of gumboots, knee high gumboots, through the dry summer months were required to be fenced, which has always been a great joke among farmers. I’m a retired farmer by the way. Your “facts” are very selective.

No point in arguing with a climate change denier

This really is ill informed commentary,

Firstly the Havelock North debacle will be shown to be caused by some very poor decisions by District Council staff to allow a bore/aquifer on their land to be contaminated by leasing it for livestock grazing without even telling the grazier that the hole in the middle of the field with a wire fence around it was a town supply bore. Every other similar situation in NZ has acres of bush and secure fences to prevent even wild animal contamination. This is why one council is reluctantly suing another. I am surprised Gareth that you would allow such ill – informed tripe to be published on your site.

Secondly 99+% of waterways on Fonterra farms are fenced from waterways

Thirdly there is a huge project NZ wide going on that is measuring and setting levels of nitrogen allowable limits. Further It is highly likely that further diary conversions will be severely proscribed by council consent processes in the very near future despite Mr Keys wish to treble the industry size

Fourthly each consent for a diary farm limits the number of cows allowed on that farm hence its nitrogen production/useage.

Fifthly the industry is spending a huge amount in research to mitigate nitrogen emission and runoff

Sixthly the imposition a a fart tax from such a dubious premise as climate change that has its supporters flying all over the world lecturing us on is poor economics which I thought you prided yourself on. The “science” of an anthropogenic cause of perceived global warming, contrary to popular belief, is far from settled.

Lastly any water scheme I am aware of will/does carry charges for its use and hence is not free as posited. I agree that the taxpayer balance sheet should not be used however that is a different argument.

As an aside I love how so many comments have lamented dairy farming whilst extolling the virtues of horticulture without having any idea of the pesticides, fertilizers etc those industries (quite rightly) use to enhance production. Caveat Emptor!!!!

Cultured meat and milk is here. The world’s livestock have the biggest impact on climate change. NZ farming must face up to the future and the first step along the way is to have farming survive without subsidies.

Increasing productivity (on farms) has been drummed into farmers over the years from everyone from their local Farmlands / PGGW agent to Fonterra, because it boosts the amount of product they buy / have to sell (respectively). The government also likes this because it contributes to GDP growth . . . . . another misguided pursuit.

Whilst I am absolutely sure that there are low input / low polution / low impact farming practices out there which would increase a farm’s profitability, unfortunately they would be contrary to all that has been drummed in to the entire industry for decades, would negatively impact the turnover of the farm support/supply industry and potentially reduce Fonterra’s supply of raw product (to say nothing of the threat to GDP growth). Who is going to educate / promote these practices ? We need to think about how to educate & incentivise farmers to do something contrary to what they’ve always been told, and which is also contrary to what these other influencers will want them to do.

It’s a similar situaton in healthcare, where vested interests (ie. a very large and powerful Pharmaceatical industry) actually wants people to be unhealthy in order to sell them drugs, where in reality a dietary adjustment may cure the patient’s ill’s. Who makes money out of that ? Certainly not the large, powerfull, well funded, well connected pharmaceatical companies.

How can we help farmers to diversify away from dairy into profitable horticulture? The dairy industry is cruel, with over 2 million bobby calves bred to be slaughtered in NZ every year, just to keep the cows lactating! Animal breatmilk isn’t healthy for humans, and has been linked to diseases like breast cancer. We need to be smarter than this, and ahead of the trend, to produce healthy food the world will want in the future. Ive read agriculture is less environmentally destructive, and more profitable per hectare. Im thinking about top quality exports still like apples, kiwifruit and wine. Farmers work hard and do care about their land. I think they need help to get off the dairy death spiral.