To John Key, Bill English, Nick Smith, from Ken S 27 March 2010


Honorable PM Key
Honorable Bill English
Honorable Dr Nick Smith


You can expect farm impact statements such as this to be circulated every week throughout New Zealand. The uncertainties dumped on rural New Zealand by the ETS are real, and these are people who supported placing the National Party into office - and who are now being damaged.

The fact that National is going to get a backlash is most unfortunate, because there is much important work to be done. Trashing New Zealand's primary export sector means to Kiwis that promises of 'catching up' with Australia are as hollow as when they were previously made by Helen Clark. Furthermore, the ETS belies the claimed intent of this government to reduce red tape and bureaucracy - and you all know that.

Why is the National party doing this to it's own flock???

Ken S
Farm Impact Statement for Neil Henderson

The farm my wife and I own was carved out of the bush by my grandfather, who left his building business to become a self taught farmer. When he commenced in 1892 the nearest grassland was 20 kilometres away and after packing in supplies he had to return his horses there to graze and walk back to his block. Conditions were difficult for this bachelor for many years and the rest of his family felt sure he would lose all his money on the venture. Gradually he prevailed and by 1920 all the bush had been felled and the grassland was improving.
The farm supported his family of six children through the 1930’s depression with no help from the government and no loan write-offs. At the time of his death in the early 1940’s the farm was debt free but the draconian death duties of the time necessitated a mortgage to pay them. The outbreak of bush-sickness at that time compounded the issue. But the sons worked hard fencing and improving the land and pulled the farm through. With the discovery of the cure for bush-sickness the stock again thrived and the farm became one of the first to consistently achieve over 100% lambing, and the stock on the farm were held in high regard by fellow farmers.
The farm had no need to take up the Livestock Incentive schemes and Land Development Encouragement Loans of the 1980’s. The work had already been done out of income.
With monthly temperatures swinging two degrees either side of the average and similar large variations in rainfall, all generations on this farm are no strangers to climate change. A drought in the 1940’s left no blade of green grass anywhere in this normally emerald green summer wet district. Floods have also damaged infrastructure and revealed pockets of land that have erosion potential. This farm was one of the first to use debris dams to stabilize stream beds and an ongoing planting program continues to protect gullies and also provide shade for stock. The sudden and severe start to last winter forced the sale of over 60 head of cattle to allow us to carry the rest through. With an increasing number of scientists, including those in the IPCC, now predicting a cooling of the climate for at least ten years, this has left us pondering the implications. As an aside, low winter temperatures are definitely the limiting factor on production in this area. If humans artificially lower the temperature further what rights do we have for compensation for lost production opportunities?
Over time the biggest challenge to this farm’s future has shifted from coping with what the climate dishes up to what the government loads on us in bureaucracy and costs. Expressed another way, we are being killed by economic mismanagement as we accept the crumbs left after everyone else has taken a bigger slice of the cake. Back in 1992 we were getting close to $1000 for a 320 kg carcass steer. We are getting the same amount now!!
But now we have an even darker cloud hanging over us- the ETS. While it is true that in the short term it is not quite the cyclone left behind by the Labour Government it has the potential to be just as devastating.
This farm is relatively small with 1400 ewes, 370 hoggets, 150 breeding cows, replacement heifers and steers to fatten to give about 410 cattle all up. Our Economic Farm Surplus (EFS) (the amount left after an allowance for the owner’s salary and available for debt repayment, capital expenses and return on equity) for the last five years averaged $66,199. This is 117% of the district average.
Total annual livestock greenhouse gas emissions are deemed to be just over 1300 tonnes per year.
Because of the intensity base in the amended scheme, exact costs are difficult to calculate. However if I calculate our costs making no allowance for intensity we have a cost in 2015 of $3250 for livestock emissions alone at a carbon price of $25/tonne. This appears to be the default price used in all government calculations, presumably because it paints a rosier picture. But the price of carbon was $50/tonne in 2008 before the current economic meltdown and the uncertainty over Copenhagen caused a collapse. It is reasonable to assume that the price will rise if a post Kyoto agreement is reached and, to use IPCC parlance, it will be highly likely the price will be over $50/tonne, which will double the cost to us to $6500 which is close to 10% of our EFS.
If we look out to 2025, the year for which the Government has set a target of catching up to Australia in per head income, we will be liable for almost 23% of our emissions from livestock. By then the carbon price is highly likely to be at least $120/ tonne, based on IPCC projections that the carbon price will treble every twenty years. This will cost us over $35,000 and is over half our EFS.
Now let us move out to 2050, the year that the IPCC likes to quote as a target date for 50% below 1990 emissions levels.
By then we are liable for just over 50% of our livestock emissions. The carbon price is likely to be about $500/tonne, bringing our cost to a cool $338,000!! This is more than FIVE times our EFS and we are only just over half way to implementing the full effect of our livestock emissions!!!
It should be ABSOLUTELY obvious to anyone that there is no way the emission intensity allowance is EVER going to offset this.  The only available option to remain economically viable is a carbon sink forest. But this is an unsustainable land use. We are geographically isolated so it will be uneconomic to harvest pines for timber so the land will be locked up forever at zero return once the trees reach maturity. More will then need to be planted to continue covering our livestock emissions, further reducing the land available to farm stock on and make money. To be sure, we do have some land that is relatively low producing and with sky rocketing fertilizer prices there are questions over its future economic viability. But this land already has scattered secondary native species growing on it and I would much rather see this area revert to full native bush. But the amount of carbon stored per year by native bush is only about 10% of pines so we would not have a large enough area to sequester the carbon required. We would be forced into pines at the expense of biodiversity. Mature pines will also bring the problem of wildling seedlings.
It is interesting to note that even at a carbon price of $25/tonne a pine forest from year thirteen will deliver a return of between 3.7 and 5 times the current return for livestock before allowing for any livestock emissions for the stock. But eventually the pines reach maturity and the income dries up. It is not sustainable long term. However this income is so good that over 50 years each hectare will earn well in excess of $25,000. If we took all the credits off our farm for fifty years and invested them at a mere 3% our annual income would be $300,000, which is 4.5 times our current EFS. Is this what our nation wants us to do?
My conscience won’t allow me to do this yet. There is also the hope that one day everyone will awaken to the flaws of the AGW theory. Then our paddock of pines will be as worthless as a paddock of gorse and blackberry is now.
But we do need to start planning right NOW for the future. The present legislation says we will have our livestock operation soon becoming totally non-viable. To have pines established and sequestering large amounts of carbon by 2020 we need to be planting now. It will be too late to wait for the review process and hope it softens the scheme.
We are left with a choice between economic unsustainabiltyor environmental unsustainability. To use an Australian phrase, that gives me two choices- Buckley’s or none.
Livestock farming will become totally uneconomic and the nation will become one big carbon sink. Vast areas will be bought up by foreign companies to plant pines to offset their emissions. The carbon credits will go offshore. The people will leave rural areas. The schools will close. The communities will die. The towns and provincial cities will bleed as businesses fold. Out of work people will flock to the bigger cities in the hope of work. But just as it is now in Third World countries it will be a futile dream. There will be no work as there will be no industry. There will be no agricultural produce to process, no goods and services to provide for the rural sector. New Zealand will be a barren waste of endless miles of pines. Crime will soar….
My maternal grandfather carried a ‘momento’ from Gallipoli for life in the form of a piece of shrapnel. My great uncle still lies with countless other ANZACS at Gallipoli. An uncle went through life psychologically scarred by active combat. Did these three farming forbears pay this price to give our children this future? The answer lies in your hands. I know there is a review due next year. But we can’t wait. We need to know NOW so we can plan. Your assurances that you will not allow the agricultural sector to be hurt carry no weight. In spite of warnings, an ETS was brought in that in its present form does destroy agriculture. You promised New Zealand would not be a world leader on climate change policy, and that we would be aligned with Australia. In spite of changes to Labour’s ETS your election promise is still unfulfilled. Comments from Ministers show a determined reluctance to move any further. The anti smacking referendum gave a clear signal of the wishes of the people. You ignored that. Your broken promises mean we need to see action before we believe. We have NO confidence in the review process. Every passing day sees more carbon trading infrastructure rolled out and more people with a vested interest to keep it all going. The longer we are left waiting the dimmer our hope becomes. Our farm and our children need you to act NOW. The ETS MUST be postponed until Australia and the USA bring in comparable legislation AND the world as a whole is on a post Kyoto agreement.
Neil and Esther Henderson