Prime Cut: Election 2017 brings climate to front

Trees
Planting trees, seen as one of the ways of offsetting NZ emissions, could place a strain on hill country farmers. Photo: R.Spencer

The splitting up of the Ministry for Primary Industries, water quality and a refreshed focus on climate change issues are on the cards for New Zealand’s red meat sector. This follows results from Election 2017, which have ushered in a new coalition government between the Labour Party, NZ First and Green Party.

Jacinda Ardern
Jacinda Ardern, New Zealand Prime Ministe

The incoming Cabinet team led by the new, and 40th, Prime Minister of New Zealand Jacinda Ardern. The new ministers will be receiving briefings shortly from the various government departments and major primary sector organisations. The meat industry has already set out its wish list in Meat Industry Association’s/Beef + Lamb NZ’s 2017 manifesto, It is too early for comments as yet, but the sector is already busy assessing what the changed environment will mean for the red meat business, exporters, meat processors, farmers and others involved in this $10.4 billion sector.

Damien O'Connor
Damien O’Connor, New Zealand’s new Minister of Agriculture.

Ministry for Primary Industries goes separate ways

The biggest immediate news is that the Ministry for Primary Industries is to be broken up again into separate ministries for Agriculture, Fisheries and Forestry. This was prompted by pressure from the fisheries sector and has been welcomed by forestry, but unless it is thoughtfully considered and progressively done could be disruptive potentially for the red meat export trade, as it was when the ministries were brought together eight years ago.

The newly announced Minister for Agriculture, Biosecurity, Food Safety and also for Rural Communities is Damien O’Connor, who also gains the associate trade and export growth positions. O’Connor, a former West Coast Young Farmer of the Year, was first elected to Parliament in 1993, has been a member of various iterations of the Primary Production selection committee since 1997, was previously minister for rural affairs and associate minister for agriculture in the previous Labour government, before moving to become Labour’s opposition spokesperson on agriculture nine years ago.

Another point of note is that agriculture moves down to number sixteen on the Cabinet list (former Minister for Primary Industries Nathan Guy was eleventh on National’s list) perhaps reflecting its importance to the incoming government.

No mention has been made yet of the Primary Growth Partnership programme, which had its genesis in the last Labour government, was fine-tuned by National and is starting to produce results.

Watered down

Water, one of the most contentious issues of the election campaign, retains a major focus in the Coalition’s programme. New deputy prime minister, NZ First leader Winston Peter’s influence has ensured there will be no water tax for farmers this three-year electoral term. The news has already been welcomed by Federated Farmers’ president Katie Milne and also by Beef + Lamb NZ (B+LNZ Ltd) chairman James Parsons who cautions: “… but, we will have to see how some of the challenges to the proposal – including who owns water – plays out.”

The Supply Agreement has a focus on freshwater quality improvement and specifically mentions stronger regulatory instruments and stricter enforcement of the Resource Management Act, he notes.

“We are supportive of freshwater quality improvement, but the risk here is that a one-size-fits-all approach is taken,” he says. “B+LNZ will continue to develop and promote an approach to improving freshwater quality based on identifying and managing the specific issues faced on-farm or in a catchment. We need to invest in actions that make a difference, not in uniform requirements that ‘everyone has to do’.”

While current commitments to Crown Irrigation Investments are likely to be honoured, government support for irrigation will probably go in the long-term.

Climate changes

Labour’s Supply Agreements with its partners include a Zero Carbon Act and an independent Climate Change Commission, first proposed by former Parliamentary Commissioner for the Environment Jan Wright. This will determine whether and how New Zealand agriculture will enter the Emissions Trading Scheme.

Green Party co-leader, former management consultant James Shaw, assumes ministerial responsibility outside Cabinet for Climate Change alongside the statistics portfolio, plus associate minister of finance. His Green Party colleague, former journalist Eugenie Shaw, becomes minister for conservation and land information and associate minister for the environment, again outside cabinet.

Certainty about emissions targets stretching longer than election cycles will help with investment decisions which James Parsons says can be positive, but he believes there are some clear risks for sectors with limited opportunity to reduce emissions.

“On the limited detail available, it seems that agriculture would be excluded unless and until the Climate Commission recommended its inclusion. If that happened, agriculture would only be liable for five percent of its greenhouse gas emissions, with the money generated from that going to mitigation research and tree planting,” he says.

Tree planting, the major identified way for New Zealand to mitigate emissions, could prove a significant challenge for the sector over the next three years, Parsons believes. Plans are for 100 million trees a year to be planted in a Billion Trees Planting Programme.

“There is a place for trees, but not at the expense of productive hill country farmland,” says Parsons. His organisation will be urging the new Government to recognise what sheep and beef farms already contribute to carbon sequestration – through shelter belts, wooded gullies and permanent pastures – before looking to sheep and beef farmers to retire productive land into forestry.

David Parker
David Parker, new Minister for Trade.

Trading places

As new foreign minister – and also minister for state-owned enterprises and racing – Winston Peters will use his previous experience gained in the mid-1990s in the same role to improve relations with Australia, build bridges with the US and reopen discussions once again on a free trade agreement (FTA) with Russia.

How to reconcile election policies around restricting foreign access to buying housing and farm affordability in a way that does not jeopardise New Zealand’s trade will now fall to new trade minister David Parker. He has also taken up the role of attorney-general, along with portfolios for economic development, environment, export growth, plus associate to finance minister Grant Robertson.

On his plate will be liaising with China, which re-elected its President Xi Jinping yesterday for a further five-year term, careful approach of next month’s Trans-Pacific Partnership talks with the remaining 11 countries (TPP-11), and the negotiation of FTAs with the EU and UK among other vitally important deals to be done.

Parsons points to the fact that New Zealand exports 95 percent of lamb and over 80 percent of beef and there is a need to stay competitive in the marketplace.

“Opening up FTAs could be problematic and lead to demands for something in exchange from the other side, or delays in implementing FTAs, such as the TPP,” warns Parsons. “If we re-open negotiations with 11 countries, it may be years before they conclude again. We need to address the downsides of foreign investment without having the hamstring our exports.”

Steadying the ship

Steadying the ship will become the first job for the incoming Cabinet, already facing the biggest drop in the dollar for five months on the news of changes – which will hearten exporters in the short-term. However, this will be offset by other proposed changes inflicted on the sector such as a rise in the proposed progressive rise in the minimum wage to $20 per hour by April 2021.

Other changes that might impact the sector are changes to the rail and port infrastructure, though it is yet to be seen if they will be negative or positive. The changes are part of a $1 billion promise to invest more in the regions, that also include the challenge of planting 100 million trees a year.  These are more wins for NZ First and a regional economic development ministerial in-cabinet position for NZ First’s Shane Jones, who has also gained the forestry portfolio.

With 56 seats, the strong and well-resourced National Party – now in opposition mode – will be looking for every opportunity to keep the new team on track.

Work will continue for the 80,000 employed in the red meat sector, alert to any changes that may impact on business, both here in New Zealand and for the sector’s 100+ export markets.

 

 

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