Chapter 13 Agriculture

In July 2020, the Government released its vision and roadmap for the sector – Fit for a Better World: Accelerating our Economic Potential [PDF, 2.1 MB].

The vision for the sector is to meet the greatest challenge humanity faces – rapidly moving to a low-carbon emissions society, restoring the health of our water, reversing the decline in biodiversity and, at the same time, feeding our people. It envisages designing modern regenerative production systems fit for a better world, alongside innovative science and technology. Achieving this vision will increase the economic and environmental resilience of farmers and growers in Aotearoa, including helping ensure high-value exports markets for low-emissions food products.

At the heart of this vision is te taiao. For Māori, te taiao is the natural world that contains and surrounds humanity in an interconnected relationship of respect. The Te Taiao Framework* has been developed with guidance from mātauranga Māori specialists, farmers and growers, sector experts and scientists.

The health of the climate, land, water and living systems comes first. When nature thrives, so do our families, communities and businesses. The Te Taiao Framework also represents new leadership based on a genuine partnership with Māori.

Embracing te taiao and reducing emissions will require mahi tahi – working together – with Māori and the sector, to support a transition to a lower-emissions future for agriculture. This will lay the foundations

* Taiao Ora Tangata Ora Te Taiao: The Natural World and Our People Are Healthy – Hei anga whakamua mā tātou A new way forward for Aotearoa New Zealand’s food and fibres sector [PDF, 590 KB]

The agriculture sector not only makes up half of Aotearoa New Zealand’s greenhouse gas emissions, but it is also highly exposed to the impacts of climate change. Reducing emissions from the agriculture sector will allow us to meet market expectations for sustainable, low-emissions products and improve the resilience of our rural communities.

The impacts of climate change are already being felt across Aotearoa New Zealand’s agriculture sector. Across all regions, increasing pressure is being felt through drought (including in regions which have not previously experienced drought) and increased flooding and extreme weather events. Increased rainfall events are projected across the country and increased drought severity is projected to increase in almost all regions.*

Aotearoa is a leader in sustainable agricultural innovation and by addressing our own agricultural emissions, we can provide solutions for the rest of the world.

* Climate change scenarios for New Zealand [NIWA]

Agriculture contributes 50 per cent of our emissions

The agriculture sector contributes 50 per cent of Aotearoa New Zealand’s gross emissions. Approximately 94 per cent of our nitrous oxide emissions and around 91 per cent of our biogenic methane emissions are from agriculture.

About three-quarters of agricultural emissions are biogenic methane emitted from livestock, followed by nitrous oxide. Nitrous oxide emissions from nitrogen fertiliser use make up about 3.9 per cent of agricultural emissions.

Agriculture needs to contribute to meeting our climate goals.

Nitrous oxide and carbon dioxide emissions from agriculture are included in our net-zero target for 2050. However, there are separate 2030 and 2050 targets for biogenic methane emissions. The target is to reduce biogenic methane emissions by 10 per cent by 2030, relative to 2017 levels, and 24 to 47 per cent lower by 2050.

The split gas target reflects the different impact of methane – which is a short-lived gas – compared to carbon dioxide and nitrous oxide, which are long-lived gases. While methane remains in the atmosphere for less time, its warming effect is 28 times greater than carbon dioxide.*

Like all greenhouse gases, methane emissions make the world warmer than it would be otherwise. The Intergovernmental Panel on Climate Change (IPCC) advises that rapid, steep methane reductions, alongside bringing global carbon dioxide emissions to net zero by 2050, are needed to limit global warming to 1.5˚C.

* This statement is based on information in the Fifth Assessment Report of the United Nations Intergovernmental Panel on Climate Change, completed in 2014 [IPCC website]

Agriculture is exposed to the risks of climate change and opportunities of the global response

The agriculture sector is a significant part of the Aotearoa economy, accounting for 10 per cent of our GDP, over 65 per cent of our export revenue, and nearly 12 per cent of our workforce.*

The sector plays a key role in the Māori economy, as tangata whenua have made significant investments in agriculture, with assets of NZ$8.6 billion in sheep and beef farming and NZ$4.9 billion in dairy farming, in addition to investments in forestry and land retirement.** Hapū, iwi and whenua Māori entities are estimated to own 30 per cent of sheep and beef production and 10 per cent of dairy production.

Farming also provides a way of life for our rural communities.

However, the sector is highly exposed to the impacts of climate change, such as droughts and floods, as well as to global responses to climate change.

Other jurisdictions are starting to consider how trade levers can be used to enforce sustainability requirements on imported goods.

While market pressure poses a risk to the sector, it also presents an opportunity to meet the market with low-emissions agricultural products. In turn those consumer preferences will increasingly drive our transition to a lower-emissions agriculture sector.

Our actions now put us in a better position to meet the needs and requirements of markets in the future.

* Situation and Outlook for Primary Industries (SOPI) [PDF, 18.4 MB]

** Te Ōhanga Māori – The Māori Economy [PDF, 17 MB]

We need to build resilience in our communities while reducing emissions

In transitioning the agriculture sector, we need to ensure that the sector is in the best position to seize the opportunities of the transition.

Producers are responding to an increasing number and range of changes – which stem from shifting market requirements (through supply agreements), as well as regulatory changes. The number and speed of these changes will have cumulative impacts on farm productivity and profitability, social and mental wellbeing and the resilience of our rural communities. The effects of those changes on each farm or business will vary.

Agricultural emissions make up a large proportion of the overall Māori emissions profile. The Government is committed to partnering with Māori to support Māori-led solutions to meeting our climate objectives. The Government is working with Māori to understand the issues that affect their interests and whenua within key work programmes, but there is more to be done.

Reducing biological emissions while providing for the economic and social resilience of our rural communities over the long term requires that we have the right tools, technologies and supports in place to enable producers to make changes that reduce their emissions.

The actions in this chapter outline how the Government, farmers and growers, industry and Māori will work together to reduce emissions in a way that improves the resilience of our rural communities, maximises the opportunities of the transition and protects Aotearoa against potential disruptive global shocks as our export markets respond to climate change.

This section outlines the Government’s approach in partnership with industry and Māori to reducing agricultural emissions. It focuses on actions over the next three years and sets the foundation for more accelerated reductions over the next 15 years.

Many of the actions in this section build off He Waka Eke Noa – Primary Sector Climate Action Partnership (He Waka Eke Noa) that was established in 2019. This has seen the Government work in partnership with the primary sector, Māori, farmers and growers on practical solutions to reduce agricultural emissions and build resilience to climate change.

Many producers are already reducing their emissions through actions such as precision fertiliser application and planting marginal land. New mitigation technologies are also emerging that can make noticeable reductions in methane and nitrous oxide emissions. However, barriers prevent widespread action.

• Many farmers are not yet aware of the drivers of emissions on their farms and options to mitigate them.
• Farmers have only limited incentives (primarily coming through processors) to adopt new technologies or make practice changes to reduce their emissions.
• For some farmers, practice changes and available mitigation technologies are not cost effective in the absence of a price on agricultural emissions or clear market premium.
• The most promising mitigation technologies are several years away from use on pasture-based systems (eg, methane inhibitors), or are still in an early stage of research (eg, a methane vaccine).

The Government, industry and iwi/Māori are targeting actions to overcome these barriers and enable further development of mitigations technologies.

Five focus areas guide our actions to reduce emissions

Five key focus areas for agriculture have informed the actions included in this emissions reduction plan. These are being driven by our response to He Pou a Rangi – Climate Change Commission’s (the Commission) recommendations, feedback from public consultation and the Government’s commitment to an equitable transition to a low-emissions future for Aotearoa.

Actions are outlined within our first four focus areas (see figure 13.1). The fifth focus area, "enable Māori-led solutions", is cross-cutting and embedded in actions and work with Māori across the other four focus areas.

Figure 13.1: Focus areas for agriculture

Focus area 1: Price agricultural emissions by 2025

This focus area will enable the Government to deliver one of the Commission’s key recommendations: ensuring effective pricing of agricultural emissions.

A key priority of He Waka Eke Noa is to deliver advice on how to price agricultural emissions. Pricing agricultural emissions helps create an incentive for emitters to adopt cost-effective mitigations.

He Waka Eke Noa has explored alternative pricing approaches to the New Zealand Emissions Trading Scheme (NZ ETS) to ensure that the agricultural emissions pricing scheme is effective in driving emissions reductions at the farm level. Its final advice will be provided to Ministers by 31 May 2022.

Expected emissions reductions will depend on the details of the recommended pricing mechanism, such as what mitigations are recognised and rewarded, and how revenue is recycled to support further reductions.

The Commission will report to Ministers by 30 June 2022 on:

• He Waka Eke Noa progress towards farmer preparedness for agricultural emissions pricing
• overall progress towards farm-level obligations of farm emissions reporting and farm plans.*

* See Climate Change Response Act, Schedule 5: Primary sector climate change commitments [New Zealand Legislation website]

All farms will have emissions reports and mitigation plans by 2025

To help prepare producers for the introduction of emissions pricing, He Waka Eke Noa has been supporting producers to know their emissions – through the "know your numbers" initiative – and have a plan to measure and manage emissions.

The Climate Change Response Act 2002 has legislated milestones for:

• 100 per cent of farms to measure and document their annual greenhouse gas emissions by 31 December 2022
• 100 per cent of farms to have a farm plan to measure and manage their emissions by 1 January 2025.

As at 31 December 2021, 61 per cent of surveyed farms* knew their annual total of on-farm emissions and as at 1 January 2022, 21 per cent of farms had a written plan to measure and manage their emissions.

He Waka Eke Noa has also produced Greenhouse Gases: Farm Planning Guidance [PDF, 12.1 MB] to support farmers to incorporate emissions into their farm plan.

* He Waka Eke Noa Milestone update and six-month progress report [PDF, 3.4 MB]

Focus area 2: Accelerate new mitigations

This focus area will speed up the availability of emissions reduction mitigation technologies. The Government and industry have invested about NZ$200 million over the last 10 years* into agricultural emissions mitigation research, capability building and international leadership.

This investment has contributed to building an evidence base, developing new technologies, increasing animal productivity while reducing emissions, and improving emissions measurement.** For example, it is now possible to selectively breed lower methane emitting sheep without any adverse effects.

Other initiatives being investigated include low-methane and low-nitrous oxide emitting feeds, methane and nitrous oxide inhibitors, and a methane vaccine for ruminants.

* This figure includes government funding of NZ$82.500 million over 10 years for the Global Research Alliance on Agricultural Greenhouse Gases, NZ$69.050 million over 10 years for the New Zealand Agricultural Greenhouse Gas Research Centre, and NZ$23.025 million over 10 years for the Pastoral Greenhouse Gas Research Consortium (funding in the consortium was matched 50:50 by industry). The figure excludes smaller funds, or funds used for broader outcomes, such as the Sustainable Food and Fibre Futures fund [Ministry for Primary Industries website]

** Domestic research has been supported through the government-funded New Zealand Agricultural Greenhouse Gas Research Centre, alongside other programmes, including the Sustainable Food and Fibre Futures fund, the Sustainable Land Management and Climate Change research programme, New Zealand’s Greenhouse Gas Inventory research fund [Ministry for Primary Industries website] and the Pastoral Greenhouse Gas Research Consortium.

Focus area 3: Support producers to make changes

This focus area will work towards supporting producers by enhancing access to the right information, knowledge and tools to make changes that best fit their farming system. As new technologies become available, it will be critical to support and enable uptake at farmer and grower level, translating research and science into on-farm action, and working closely with focus area 2.

The Government is working with industry on specialised climate-focused extension services to help producers adopt emerging technologies and practices. These services provide credible, trusted and relevant information to producers on reducing emissions. They would complement and build on the extension activities already underway through industry groups.

Reducing emissions from synthetic nitrogen fertiliser

Existing and proposed extension and advisory services include best practice advice to reduce emissions from nitrous oxide from fertiliser. Actions to reduce synthetic nitrogen fertiliser include:

• adopting best practice to ensure fertiliser is applied in the right amount, in the right location at the right time to limit the amount of nitrogen lost to both water and the atmosphere. Many farmers and growers have already reduced nitrogen fertiliser use, often with the help of nutrient budgeting tools, and/or implementing good management practices through farm environment plans. The synthetic nitrogen fertiliser cap [PDF, 261 KB] limits the application of synthetic fertiliser to land as part of pastoral activities to less than 190 kilograms of nitrogen per hectare per year
• increasing the proportion of nitrogen fertilisers applied that have been modified to reduce emissions, for example, urease inhibitors, nitrification inhibitors and slow-release nitrogen fertiliser products.

Enabling a Tikanga-based, Māori-led transition

Māori face a unique set of challenges transitioning to lower-emissions agriculture. For example:

• a significant proportion of whenua Māori is either underused or may be too steep, eroded or remote for productive use
• an inability to access capital through mainstream providers, land tenure systems, ownership structures and historical separation from land
• a lack of access to traditional agricultural extension services.

Without a focus on a Māori-led transition, there is a risk that climate policies may lock in low-value land uses for whenua Māori and compound historical disadvantages.

Expanding digital connectivity to rural Aotearoa is a key enabler for more farmers to monitor, report and reduce emissions on farm

To date, as of 31 December 2021, 70,911 rural homes and businesses can access improved broadband and 983 km of rural State Highway have been provided with mobile coverage. 310 mobile towers are now live, and 70 mobile towers have had a necessary capacity update.*

However, many rural communities have internet connections of limited performance, and it is estimated that there are around 5,200 rural premises with no internet service at all. Further providing, or enhancing, broadband internet connectivity (in terms of coverage and performance) will benefit farmers and others working in the primary sector through:

• unlocking access to information on climate change and steps farmers can take
• supporting more farmers to adopt precision farming tools to more efficiently manage inputs, lift productivity and minimise environmental impacts. Precision agriculture tools can provide access to measurement and calculation tools for precision fertiliser application. However, uptake of these precision agriculture tools has been hindered by rural infrastructure limitations – such as lack of rural broadband and 5G accessibility
• lowering carbon emissions from vehicles. Remote internet can reduce the number of avoidable trips (eg, for health, education or business needs) and for every kilometre not travelled, carbon emissions are reduced by around 200 g
• enabling sensors, real-time monitoring, and verification of carbon management techniques such as sequestration and regenerative agricultural practices through wireless 4G and 5G network infrastructure.

Better broadband connectivity and access to online software and services will also reduce transaction costs associated with farm planning, monitoring and reporting. For any farm-level pricing system, uploading data and evidence into the reporting system will be critical. Better digital connectivity will likely help farmers reduce the time and effort needed to participate in these systems.

* See Quarterly Connectivity Updated Q4: to 31 December 2021 [PDF, 7.6 MB]. 

Focus area 4: Transition to lower-emissions land use and systems

As identified in the Fit for a Better World roadmap, the Government and industry will assist producers in a transition to a more circular and low-emissions economy, integrating the ki uta ki tai (from the mountains to the sea) principle into sustainable land management.

Over the course of the first emissions budget, the Government will continue to fund initiatives that support a more sustainable, productive and inclusive primary sector. The Government will explore opportunities for the state-owned Landcorp Farming Limited (trading as Pāmu) to lead in this area.

Invest in the sustainable food and fibre future

The Government will continue to invest around NZ$40 million per annum via the Sustainable Food and Fibre Futures co-investment fund, with a number of initiatives expected to have a focus on sustainability.

As an example, in 2022 the Government will invest in prototyping spatial integrated farm plan – a mapping tool to support farm plans that include environmental and greenhouse gas reduction considerations as well as farm productivity.

Build knowledge on regenerative agriculture

More research is needed to understand and measure the potential environmental benefits of regenerative agriculture – a nature-based solution – in Aotearoa New Zealand’s specific context – including how such practices can contribute to our 2050 targets.

Regenerative agriculture practices aim to increase soil carbon, improve soil health and contribute to improved freshwater quality, reduce the climate footprint of food systems and enhance biodiversity.

Provide food and fibre research and development plans

Through the Fit for a Better World roadmap, several science and mātauranga Māori R&D plans are being developed. These aim to accelerate areas of R&D to grow and transform the food and fibre sector, while promoting lower-emissions land use and food production. Te ao Māori and mātauranga Māori are central to the development of these plans and each plan identifies R&D needs for both science and mātauranga Māori.

For example, the landscape scale decision-making accelerator will provide land stewards, rural communities and regulators with practical tools to make informed decisions about land use. This includes finding the best way to convey information that considers constraints and pressures at the individual farm level, including the requirement to reduce emissions. It also considers ancestral knowledge of the land alongside technology and science to develop diverse and sustainable landscapes.

These actions will support work already underway to lower emissions

Sustainable finance for on-farm sustainability outcomes

The Sustainable Agriculture Finance Initiative (SAFI) [Centre for Sustainable Finance website] was established in 2021 through The Aotearoa Circle (a public and private partnership) to accelerate further investment and support for sustainable agriculture in Aotearoa. It supports the finance sector to take into account environmental and social factors when making decisions on financial solutions, ultimately supporting better on-farm sustainability outcomes.

The following table sets out the sub-targets recommended by the Commission and accepted by the Government, for the agriculture sector.

Table 13.1 Sub-targets for the agriculture sector

Figure 13.2: Agriculture sector emissions reductions

Action now will lay the foundations for deeper cuts in emissions from the second and third emissions budgets

The actions in this plan will help us lay a strong foundation for reducing agricultural emissions. As initiatives in this chapter are developed their contribution to reducing the shortfall between agriculture’s sub-target and the expected policy impacts for the first emissions budget will become clearer.

The Government’s baseline emissions projections are based on current policy settings. These include the expected impacts of freshwater regulations, productivity gains, afforestation programmes, NZ ETS-driven land-use change and the new initiatives included in this chapter. They also assume agricultural processors are entered into the NZ ETS from 2025 onwards.* This is the legislated backstop if sufficient progress is not made on designing an alternative farm-level pricing scheme.

* In this scheme, processors would report and pay for emissions produced on farm. The projections assume 95 per cent free allocation, which means processors would only initially have to pay for 5 per cent of reported emissions.