Calls for transparency in water debate forgetting costs

Irrigation, and its resulting infrastructure and maintenance costs are not free.

Irrigation, and its resulting infrastructure and maintenance costs are not free.

Who knew there were so many water experts in New Zealand.

It's amazing with the amount of stories, columns, letters, protests and petitions that the country hasn't got its collective heads together and found a solution.

There is a growing argument that farmers should be paying more for the water they use. This isn't new with both Labour and the Green Party calling for the same policy in the last election.

The difference this time round is freshwater is potentially a hot topic for the election.

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While no party has officially announced this as policy yet, it's a fair bet it will happen in the coming months.

Lawmakers have to decide what water are they referring to. Is it stored rainwater? Washdown water in a dairy shed? Stock water?  Bore water for irrigation or water drawn from a stream or river? Or sprayed out effluent on paddocks? (which is well over 90 per cent water).

Any dairy farmer will tell you that the supposedly 'free' water they use is hardly free. Northland farmer Lyn Webster said in a recent column that maintenance costs for her water system was high in time, money and power. And her farm system is low input on a relatively small scale.

Let's presume any charge will be for water from an irrigation consent used to grow pasture or feed crops.

The costs of on-farm irrigation infrastructure can be in the high six-figure range if pivots are involved. It is a considerable investment for a farmer, taking years to pay off.

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What the supporters of water rentals fail to mention is its potential effect on food prices. While farmers and processors can absorb a degree of this charge, the rest will be passed on to consumers.

This will include everything from meat, milk, fruit, vegetables and wine. All of these industries have some producers who use irrigation.

This is not an attack on those supporting a charge: They just need to acknowledge its possible effects down the value chain.

Exactly how much prices will lift is a subject of debate as some of the costs will be absorbed by the farmer and the processor.

Labour Party environment spokesman David Parker said in a column last May that prices would not be unaffected but, disappointingly, didn't explain why.

Any business owner would tell you that if you add an extra cost onto that business, the price of the goods it produces rises.

The prospect of a rental raises other questions.  For example, will a farmer who has invested in variable rate irrigation, where sensors are used on a pivot irrigator to determine the exact amount of water needed for the soil, be charged at the same rate as the neighbour who uses a much less efficient system?

What will the tax be used for? Presumably for environmental protection?

If goods are produced by irrigation water, will they be labelled as such in the marketplace, giving consumers the right to choose? 

What will this mean for commodities such as milk powder? And what will it do to dairy farmers when the next dip in the volatile milk payout comes, given it will take years for some to pay off the debt incurred from the last crash.

Here's another point to consider: Not every irrigator in places like Canterbury are dairy farmers and a charge could put the financial squeeze on some farmers, most notably grain growers.

In the past, these farmers would intensify to lift their income levels but are unable to now because of new rules around nitrogen limits introduced by the regional council. It could see the cost of producing their grain  outweigh their returns.

These plan changes, water rentals and whatever costs come with adding biological emissions into the Emissions Trading Scheme are what potentially lies ahead for New Zealand farmers.

This isn't scaremongering. It's a plea for those backing these policies to present honest budgets explaining how much all of these policies will cost when they are announced including its effect on consumer prices.

If consumers are happy paying a bit extra, then lets look at it, but please do not complain about its unintended consequences.


 - Stuff


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