Phil Journeaux
EXPERTS advising farmers around future greenhouse gas emissions legislation are concerned about information gaps. Agricultural economist Phil Journeaux from Agfirst Waikato has authored several key reports on the subject. He has tested various models to make sense of how the new rules and payment structures might work, including one project analysing emissions on 17 farms, both dairy and sheep and beef. The King Country Farmer caught up with Phil, alongside dairy consultant Giles Hailwood, to discuss the current situation. Phil said the industry felt the strain in respect to the ambiguity around overall pricing. “In terms of my dealings, a lot of farmers don’t fully understand what the implications are. This is one of the 101 things that farmers need to think about and try and cogitate and digest. “Most farmers are very aware that it’s coming. Most of them are not necessarily doing a hell of a lot because we don’t know the rules and it’s still two years away.” “I’ve talked to quite a number of farmer groups over the last few years. Without exception they want to know, and they want to do stuff, but they’re not sure what stuff they should be doing [on-farm]. “That’s some of the work I’ve been doing,” Phil said. “The key step … is to understand what [the legislation] might mean in terms of the proposed levy. “There’s very little information readily available. “When they put the proposal up to government back in June, [they] included some prices in there for carbon. “The Government, when they put their information out, just prior to Christmas also had some pricing but it wasn’t very complete. The whole thing’s up in the air at the moment. The Government’s set to make a decision. We are now talking about a price which is roughly half what they were talking about back in June last year. “So, we all sit here with our fingers crossed, waiting for the bloody Government to make a decision. Until we know the exact pricing, it’s very hard. It’s very difficult to be definitive” Phil has been working with farmers to calculate their levy based on the existing He Waka pricing – if it works out to half that, it will be a good thing. “And then depending on the price, [we] would tailor the sort of advice the farmer might take in terms of what they need to do.” Knowing the price was just the start of understanding the system. How would it look within individual farm businesses of different scales – once the price is known? “To a certain extent, it’s all well and good knowing the price, but my levy is going to be different to your levy, and each of us needs to understand that very closely,” Phil said. Farm consultant Giles Hailwood highly recommends getting support from the MPI. “They have started an on-farm support team that is out there speaking with farmers and finding out what areas they are stuck on.” The support team would connect farmers with the right rural professionals, and facilitate some of the process if necessary. Giles describes himself as a “gumboot farmer”, combining his work at NZ Farm Management with a joint venture – alongside wife Clare – milking cows and sheep on the same farm near Hamilton. Like Phil, he said pricing ambiguity was the big one: “a fairly grey area.” “It’s a bit of an unknown. As an industry, we are not sure how that pricing’s going to work on an individual farm basis, or how it’s being measured,” Giles said. Farmers would be sensitive about being charged for what was basically an unknown to them. The lack of information on how pricing would work on specific farms meant it would be harder for farmers to get a sense of what they could do to mitigate costs where possible. Farmers were already under pressure from interest rates, labour, fertiliser, feed and other costs rising significantly in recent years, Giles said. “And now we’re asking them to make further changes to an already sensitive business model.” There was a resourcing challenge around compliance with the legislation. Even the cost of fact finding might impact differently on bigger versus smaller farms. “If you’re a corporate [farming] group with scale, you may have a bit of horsepower behind you to carry out some work with consultants to model what the outcomes may look like. “But if you’re a smaller farmer, I’m not sure how they’re resourced to cope with this. “It’s not a radical concern or anything, but it’s a question of who’s going to do some of this work?” Giles said. Larger businesses could more easily access funding to make the changes required. “Bigger groups now are being exposed to what their business might look like under a more sustainable management plan. For all farmers, there could be different banking rates depending on what can be achieved on farm. There are also loans for environmental development on your farm if you’re deemed to be in a certain position with your farm’s environment plan.” How are the farmers going to get that help to make sure they’re running as efficiently as possible? “Farmers haven’t been mucking around for the last 100 years, they have been trying to get better every year,” Giles said. Most farmers realised that the information in environmental plans would point to the areas where it was possible to make further changes. On many farms, making good decisions around nitrogen allowed farmers to both comply with environmental legislation and also spend less money.
Giles said it was important to make independent decisions around the amount and type of fertiliser applied on-farm, rather than blindly relying on information from commercial groups. When environmental gains are realised, another ongoing issue related to farmers’ ability to demonstrate the environmental progress that had already been achieved, in order to access payment reductions. He has heard examples of farmers making significant gains in some areas, but these are not necessarily being recognised in Wellington. Phil Journeaux said on-farm adjustment to the new legislation, while maintaining profitability, took the form of a balancing act. “You can adjust your farm management. In the crude sense, that’s either reduce your stocking rate, but if you reduce your stocking rate, you need to increase the productivity of the remaining animals.” And this would often increase the inputs, leading to a measurable environmental impact. “Reducing stocking rate on its own is a recipe for disaster.” “So, reducing stocking rate/increasing productivity is actually quite difficult because on most farms, the grazing management and general farm management all have to step up.” One of the issues Phil has identified is that farmers may not realise the scale at which they have to make changes, to make a difference. He gives one example of a farmer considering lowering their impacts by planting out some of their farm as a kiwifruit orchard. “The key thing in terms of your greenhouse gas … you have to do it at scale. If you’ve got, let’s say, a 150ha dairy farm and you farm, let’s say 5ha of kiwifruit: that will have an impact, but a relatively small one. “If you want to have a big impact, you’d really need to plant at least 10 to 15% of your farm. “Now if you do that … you’ve now got a horticultural operation with a dairy farm attached. It’s a total change,” Phil said. Giles said farmers have always had to contend with similar challenges. “The standards in which we farm, or are expected to farm, have always been on the move, whether it’s around how we manage effluent or how we manage bobby calves or how we truck animals, how we treat our staff with remuneration and time off. “I think it’s a pretty basic comment. It’s a matter of taking it on board and seeing if there’s any improvements you can make to your business. What are the learnings and [how are we] using new technology?” So where can farmers find more information? Phil said things would become clearer once the price was known and more was understood about the model. Industry bodies would provide farmers with more information about how things would look on farm. Farmers could then make use of these tools, perhaps with additional advice from their accountant or consultant, Phil said. He recommends the Ag Matters website, provided by the Greenhouse Gas Research Centre. “There’s a number of five-minute videos of different farmers around the country doing different stuff. If you have a look, you might think, ‘I can do that on my farm.’
