Carbon tax a threat to farming viability

Hororata farmer Gavin King would rather slaughter his sheep and cattle than pay an estimated $168,000 a year in carbon tax for belching and farting livestock.

He said few farmers seemed to realise the full implications for their farm business of the Emissions Trading Scheme (ETS) to reduce global warming.

Many farms would fall over depending on the final tax rate and it would severely hurt service industries, he said.

"We could survive, but I am not going to pay carbon tax on my animals farting and burping.

"I will kill all of them before I do that if it goes to that level, too right."

King said he was prepared to pay carbon tax for greenhouse emissions from fuel used on the farm, but not for livestock emissions of methane and nitrous oxide. "I cannot accept a tax on animals doing a natural thing," he said.

"They have evolved over thousands of years burping and farting and to think we can change that in a short time is stupid. Several hundred years ago there would probably have been more animals than today."

He said for him, going into cropping would require more energy-consuming machinery.

"Farmers do not think it will happen, but once it is legislated the tax has to be paid, and if you do not pay, the IRD will send you a penalty and another demand and then we are dealing with a faceless bureaucracy."

King calculated his "conservative" carbon cost for his livestock based on Meat & Wool New Zealand figures for methane and nitrous oxide rates of 360kg for sheep and 350kg for cattle.

If carbon traded at $25 a tonne, he estimated that he would pay $9 in tax for each sheep stock unit, comprising a wintered ewe and a store lamb (36% of $25/t is $9) and double that if it was $50/t.

Each beef cow, equivalent to six sheep stock units, would cost $52.50 ($8.75 a stock unit) at $25/t or $105 at $50/t.

King has 8840 sheep stock units and 1595 cattle stock units, so his yearly tax could range from $93,525 to $187,050, he said.

Carbon is trading on the open market in Europe for about $45/t and at this rate he would be facing a $168,000-plus emissions tax for livestock each year.

The Government proposes to have farmers begin paying the tax in 2013. Farmers will be liable for 10% of the tax bill, with the Crown paying the rest up until 2018. After this, the subsidy will be gradually phased out. From 2031 farmers will pay the full cost.

King said he was not prepared to pay 10% of the livestock portion ($16,834.50, compared with the Crown's $151,510.50 at current $45/t) of the carbon tax as a matter of principle.

He also objected to the idea that New Zealand might have to balance its carbon book by buying credits from big polluting countries such as China and Russia, which had developing-nation status and big stands of forest.

"The money should stay here to develop our own country."

Meat & Wool estimates that about 82% of sheep and beef farms would be uneconomic if the carbon tax is passed. The Government appears to have gained the support of the Green, New Zealand First and Progressive parties to proceed with the bill for the ETS.

Federated Farmers president Don Nicolson said it was extremely disappointing that the bill would probably be passed. "This is a giant leap into the abyss. Here's hoping we do not kill the golden goose."

Progressive Party leader Jim Anderton said he was convinced the ETS was in the best interests of New Zealand and that agriculture would be treated fairly and reasonably.

"There is no need for alarmist and exaggerated comment that would cause concern to farmers, as all the provisions are on the basis that they can be reasonably met. If they cannot, there will be no requirement to do so."