Sunday, October 29, 2006

Geeking out on milk

In response to my post on Clark on climate change, in which I suggested that farmers should be paying the cost of their emissions rather than receiving an environmental subsidy from the government, Muerk asked the obvious question: wouldn't this cause prices to rise? And could this have bad equity effects by pricing low income families out of dairy consumption?

I've just spent the last half hour geeking out trying to answer this question. Here's my quick calculations:

According to Fonterra's summary of the dairy industry, there are 3.85 million dairy cows in New Zealand, producing 14.6 billion litres of milk. So each cow produces on average 3792 L of milk.

According to the latest inventory report, each cow produces:

  • 117 kg / year of nitrogen in urine. Using the measured emissions factor of 0.01 and the standard Global Warming Potential of 310, this turns into 0.3627 T CO2-e per year of nitrous oxide.
  • 79.4 kg / year of methane from enteric fermentation, and 0.889 kg / year of methane due to shit. Using the standard emissions factor of 21, this turns into 1.686 T CO2-e per year of methane.

Added up, this is just under 2.05 T CO2-e per cow per year. The cost of those emissions varies depending on who you ask - the government says $20 / tonne, the Greens $30. Using the Greens' figure to get a high estimate, this means an additional $61.50 a year per cow. Dividing by 3792 L of milk yields an extra 1.6 cents a litre. Hardly going to break the bank, is it?

Similar calculations to find the carbon cost added to each sausage or steak are left as an exercise for the reader.


That amounts to $60 per cow per year which is more than the average cow cocky spends on either animal health or fertiliser. Got any more bright ideas?

Posted by Adolf Fiinkensein : 10/29/2006 10:26:00 PM

so thats $236 million a year (nearly $20,000 per farmer)to do what exactly?

Posted by Anonymous : 10/29/2006 10:29:00 PM

Only $20,000 per farmer if they didn't charge more for their milk, which is what I/S was suggesting.

And if the government got more money in a nitrogen tax from those who polute, they'd have scope for another $236 million tax cuts a year.

Posted by Graeme Edgeler : 10/29/2006 10:48:00 PM

Oh! I've got a bright idea Adolf! lets all sit around until we fry ourselves just to keep smart alec little shits like you happy!

Posted by Anonymous : 10/29/2006 11:57:00 PM

Anon: the same thing it does at the moment: covering the international cost of those emissions. Currently, the government (and hence the taxpayer) is effectively footing the bill, and we shouldn't be. We should not be paying farmers to pollute.

Graeme: or to fund spending elsewhere. Obviously, opinions differ as to what that might be, but its worth noting that we could double our research effort into massively reducing this problem for a fraction of the annual cost (say, $10 million).

Posted by Idiot/Savant : 10/29/2006 11:58:00 PM

The point of having such a price for carbon is to REDUCE emissions by detering the activity. So either the charge is so low (as Idiot suggests) and would therefore not reduce emissions, or it would be high enough to bite, reduce emissions (and dairy production, exports and jobs). But Labour can't have it both ways - that it is so small no one will notice it, but that it will reduce emissions. I would have thought this was obvious.

Posted by Anonymous : 10/30/2006 08:32:00 AM

I am kicking myself. I was at an A&P show yesterday and there was a tent with a crowd in a tent advertising sustainable inputs for pasture. Something to follow up. Otherwise, there was very little to see on the sustainable/organic front, which I am told, represents about 25% of the European market these days.

Related to this is the amount of *new* irrigation taking place in Canterbury and round the McKenzie basin. Given the dust storms I witnessed in September down there I cannot believe this agriculture is sustainable.

Posted by noddy : 10/30/2006 11:49:00 AM

Anon: the price is low to consumers because its split so many ways. It's not necessarily low to farmers. And its not just about reducing production - farmers who can find ways of reducing their emissions will become more competitive when compared to their dirty neighbours, and make greater profits.

More generally, there's a point of principle here: industries should pay the full cost of their activities, rather than dumping their costs on others. That principle applies to environmental effects, and it applies to farmers. And if it means that some go out of business when their true costs are taken into account, good - They weren't really profitable anyway.

Posted by Idiot/Savant : 10/30/2006 11:50:00 AM

Idiot says: " industries should pay the full cost of their activities, rather than dumping their costs on others. That principle applies to environmental effects, and it applies to farmers. And if it means that some go out of business when their true costs are taken into account, good - They weren't really profitable anyway."

Right - and that would reduce emissions. But it would lead to social dislocation in the short-run before the long-run benefits came through, just like the abolition of subsidies in the 1980s. Does Labour have the stomach for this? If not, it is all - excuse the pun - hot air.

Posted by Anonymous : 10/30/2006 12:08:00 PM

Wow, thanks for doing all that work I/S, much obliged! I think that's an affordable increase, although Shoei noted that you had to add GST onto it.

Posted by muerk : 10/30/2006 03:22:00 PM


I have had similar discussions with people from MED and DPMC, MfE, Climate Change Office. Their view is very clear that the farmers can't do anything about their emissions, so therefore the focus and the costs should be on industry. I've even heard it posited that closing down one of the major industrial emitters could be the least cost method of getting emissions down!

While I understand farmers' options are limited, this is completely unfair and will get nothing but resentment from industry and possibly distortions if you exclude the main generators of emissions from sharing the costs of GHG reductions. I think the policy approach is driven more by what is easy than by consistency.

There needs to be a bit more of a prod on farming to encourage a fairer sharing of costs. I don't know what the answer is - perhaps it is a levy funding a percentage of the costs/carbon credits to cover industry/transport emissions until the technologies arrive to allow them to start bringing theirs down or get them to step up funding of agri industry emissions reduction research in a serious way - what has happened to the promised fart tax research fund?


Posted by Anonymous : 10/30/2006 04:43:00 PM

Idiot - you also say above: "the price is low to consumers because its split so many ways. It's not necessarily low to farmers."

But if the amount is low to consumers (under a scenario where the entire cost is passed on to consumers), it will have no impact on quantity demanded, so it will have no impact at all on the profitability of farmers --- so everything will continue just as it is. There will be no change at all.

This is the problem for Labour (and National if it is serious): To make a difference, it has to hurt someone (emitters, or consumers of products produced with emissions) hard in the pocket. Otherwise it won't change behaviour at all. The point of Kyoto is not that people who emit pay fines (have to buy carbon credits) but that TO AVOID BUYING THE CREDITS THEY CHANGE THEIR BEHAVIOUR. The whole thing is pointless if people are happy to pay the extra charges -- they must want to avoid paying the charges.

Posted by Anonymous : 10/30/2006 05:10:00 PM

Insider: of course policy is being driven by what is easy - this is a government which had to fight tooth and nail even to ratify Kyoto against a large segment of the business sector which refused to admit that there was a problem. Now, though, it looks like things might be becoming a lot easier - and I want to see the opportunity used to get some solid policies in place, rather than wasted as it has been in the past.

It is grossly unfair to treat farming as a sacred cow, and I want to see farmers do more to clean up their own mess. Given the current lack of options, I would be happy enough if they were to admit that there was a problem and put some serious effort into finding a solution by massively increasing research funding - unfortunately, they don't seem willing to do that. Federated Farmers still seems to be stuck in denial mode, and would probably go even more feral at any hint that farmers might have to pay even a fraction of the costs they are imposing on the rest of us (just look at their reaction to the "fart tax"). The irony is that they will be the ones most affected by climate change, and will no doubt be demanding that the rest of us bail them out when it begins to bite.

(The Pastoral Greenhouse Gas Research Fund is currently funding some research, but not enough. If we want to find a solution, we need to double research spending in the area. And it should be farmers, rather than taxpayers, footing the bill).

Posted by Idiot/Savant : 10/30/2006 05:16:00 PM

Anon: Note the other part: farmers who can avoid those costs become more profitable. This sets a direct financial incentive for emissions reduction at source. Farmers who ignore that incentive may not go bankrupt (it depends on how unprofitable you think farms are), but it will still hurt them in the pocket compared to their cleaner, greener neighbours.

The same principle applies to the electricity sector: generators will pass on any carbon tax or cost of permits to consumers (and this may or may not affect demand, depending on the level and the weather). But the mere existence of such a charge alters the profitability of some forms of generation compared to others, which gets generators wondering how they can avoid it (close down? Plant trees?) and alters future investment patterns. It's not just about the impact on the eventual consumer.

Posted by Idiot/Savant : 10/30/2006 05:29:00 PM

Sure Idiot, those that can avoid the costs become more profitable, so there is am incentive to improve farming techniques to reduce emissions - but then you have to have some way (an a farm-by-farm basis!) to measure how much cows on different farms are farting and so forth. It gets bloody difficult to the point of being impractical. Both main parties are going to struggle to be credible in this area - with labour having more to lose politically because it is the govt.

Posted by Anonymous : 10/30/2006 06:53:00 PM

Ultimately, it comes down to politics. Given the incredible amount of fuss made by farmers about a research charge far less than this, I can't see it happening.

While there is a small contingent aware of their impacts and trying to reduce and mitigate these (I've met a couple), there are unfortunately a much larger group who think that pollution is their right (unfortunately I've met some of these too). I'm sure we'd see a very vocal and well supported campaign from the latter group against any measures like these.

So what do we (people concerned about reducing climate change emmissions in NZ) do. I can't think of any solutions off the top of my head, but an environmental campaign on this issue might be necessary to create the level of awareness of the issue needed to sustain political action. In any case, the Government should invest massively (yes, providing farmers another damned subsidy...) in research to reduce the emmissions of sheep and cattle based industry.

On a slightly different note, I found this article about the intergenerational ethics of climate change quite interesting -

Posted by George Darroch : 10/30/2006 11:50:00 PM

I see you're still chuffed with the whole CO2 equivilency measure. Shame really.

Global warming is an issue of fossil fuels entering the atmosphere, end of story. The only farming contribution comes from artificial fertilisers.

Farms need organic compatable sward and livestock to do without them (and without the accompanying sprays and drenches that only really need go with heavily fertilised ryegrass pastures and industrialised breeds), which is not a trivial change and should really be seriously studied and subsidised by the relevant government agencies.

Subsidies to go organic? Hell yes, it's typically a full years lost production through the changeover period, and previous government subsidies forced all the farms into an unsustainable culture to begin with.
There is at least some return on the investment at this point, and would make for an awesome national product branding.

Posted by tussock : 10/31/2006 02:04:00 AM

Listening to the head of Federated Farmers and Roger Kerr just now on NatRad was quite dispiriting. Kerr is an outright climate change denier and both men spent the whole interview casting as much FUD (Fear, Uncertainty, & Doubt) as they could. FedFarmers basically think everyone else should pay because of the moral superiority of their study rural men over us city living leeches means that exceptionalism applies. Given that around 50% of our greenhouse gases come from farming this is a big worry and shows FedFarmers simply won't face the problem or engage in any real solutions if it affects their members in anyway.

Ditto for Kerr, although he spent his whole time attacking the report under discussion and advocating the usual climate denier circular argument of doing nothing until everyone else does, and because no one is doing anything neither should we.

Very depressing to see the level of disengagement and unreality from two representatives of our largest emitters.

Posted by Sanctuary : 10/31/2006 09:56:00 AM

Tussock: CO2 equivalent emissions is what we agreed to measure and reduce in the UNFCCC and Kyoto Protocol, so its what I'm measuring here. And the reason the UNFCCC and Kyoto did things that way is because these non-CO2 gases do contribute to climate change. Not as much as CO2, but enough that if we want to tackle the problem (and find interesting ways of doing it), we need to look at those gases too.

If you disagree, I suggest you take it up at the next conference of parties.

Posted by Idiot/Savant : 10/31/2006 11:31:00 AM

Here's an informed comment on why methane could be perhaps more of a concern than CO2....

Posted by George Darroch : 10/31/2006 02:14:00 PM

Yes I/S, Kyoto, but it's bullshit and always has been. Fluff to placate the people.

We can emit the same amount of methane every year and not produce any long-term increase in the global temperature; only a change in the rate of emission of methane will change temperatures, and is easily reversed inside a few years by doing the opposite.
Fossil fuels increase the temperature at a rate proporional to their rate of release. The temperature's climing an order of magnitude too fast, so we must reduce the fossil burn by an order of magnitude. That alone is what will help in the long term.

The potential for ocean scale methane leaks is pretty damn serious, but they're also several orders of magnitude larger than anything we can possibly produce with farming (and would also pass after no more than a decade of ludicrously high temperatures).

Kyoto is as it is so the Americans wouldn't suffer too badly, and then they didn't sign anyway. Haw haw.

That federated farmers guy is a nutter; I wouldn't think he'll have the job for long. Basic environmental conservatism's catching on amoungst more farmers every year (dirty farmers are really fairly rare, for all the mess they make).

Posted by tussock : 11/01/2006 04:32:00 PM

Interesting to see the Greens batting for the farming sector on food miles, while condemning them on pollution... although it's an interesting position, it makes sense to me.

Posted by George Darroch : 11/01/2006 07:59:00 PM