20 June 2017

3 minute read

Oceania

Last year, New Zealand ratified the Paris Agreement on Climate Change and committed to reducing emissions by 11 per cent on 1990 levels by 2030, but the recently released Greenhouse Gas Inventory, the official annual estimate of all human-caused emissions and removals in New Zealand, reported that in 2015 New Zealand’s emissions were 24.1 per cent higher than 1990 levels - a far cry from the country's commitment in the Paris Agreement.

What’s preventing New Zealand from turning this emission increase around is a usual suspect – dairy – yet this is not a cost they are prepared to pay for.

Earlier this year the Net Zero in New Zealand report, commissioned from UK-based company Vivid Economics, stated almost half of the country's greenhouse gasses came from biological emissions. Renewed calls to tax dairy emissions and cut the national herd by up to one third were among several suggestions given to curb solely New Zealand's greenhouse gasses, let alone reverse it to anywhere near 1990 levels.

However, Federated Farmers national vice-president Anders Crofoot, said the idea of an emissions tax on agriculture had been considered previously but was deemed too expensive.

Between 1990 and 2015, agricultural emissions increased 16 per cent largely due to an 88.5 per cent increase in the national dairy herd size and a five-fold increase in the application of nitrogen-containing fertiliser.

The report suggested cutting overall animal numbers by 20-35 per cent, but Mr Crofoot said this would be unpalatable to farmers and the economy until there is an alternative to dairying that would bring in similar cash.

While dairy produces a large amount of the country's pollution for a relatively low proportion of GDP, the dairy industry would rather New Zealand stopped asking them to reduce its herd numbers as that would affect their profits.

To March 2016, dairy contributed just 3.5 per cent of New Zealand GDP but produced approximately 47.9 per cent of emissions and its relevance to the economy is steering downwards.

For the year ending December 2016 total exports of dairy and related products were $12.05 billion, accounting for 17.2 per cent of all exports. Over the same period, tourism (including air travel) was worth $12.17b or 17.4 per cent of exports, according to analysis by the ASB.
So for those who aren't dairy farmers or a Fonterra shareholder, how much does their success matter to everything else that is done in New Zealand? 

The past five years have seen a revolution in plant-based milks, where dairy is the comparison and taste must stack up. Leading this charge has been almond milk, which in the US has seen a 250 per cent growth in the past five years, with the dairy alternative milk category grossing $1 billion in sales. Almond milk alone brought in more than $894 million in sales in 2015.

The second largest, and fastest growing, plant-based milk is coconut, and local coconut milk and ice cream business Little Island Coconut Creamery is a prime example of this market growth, with its coconut milks and ice cream placing the plant-based brand 27th at last year’s Deloitte’s Fast 50 with a 305 per cent growth. No dairy based business appeared to make this cut in 2016.

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