Most have probably heard by now that New Zealand is planning a so-called “cow burp tax” that would charge the country’s livestock farmers for the greenhouse gasses that their animals emit. The belch tax, which would be the world’s first, is controversial to say the least, and could have implications for livestock farmers across the world as other countries consider similar legislation to combat climate change.
Farming is a vital part of New Zealand’s economy with dairy products being the country’s largest export. Farm animals in the country far outnumber people, with 10 million beef and dairy cattle and 26 million sheep, compared to just 5 million New Zealanders. That makes the country unusual in that about half its greenhouse gas emissions come from farm animals. Most are methane that comes from cow and sheep burps, as well as nitrous oxide from their urine.
New Zealand’s government has pledged to make the country carbon neutral by 2050. Part of the plan includes reducing methane emissions from farm animals by -10% by 2030 and by up to -47% by 2050. As part of that plan, the burp tax calls for farmers to pay a new tax based on calculations of their herds’ emissions. Only farm businesses over a particular size would be subject to the burp levy, but it would cover an estimated 23,000 farms, or 96% of emitters.
The tax would begin in 2025, though pricing has not yet been finalized. New Zealand is expected to release details sometime in December. Prime Minister Jacinda Ardern says all the money collected from the proposed farm levy would be put back into the industry to fund new technology, research, and incentive payments for farmers. Arden also contends that farmers should be able to recoup the cost of the tax by charging more for climate-friendly products but advocates say the tax will lead to widespread farmer losses.
Not surprisingly, the plan is deeply unpopular with New Zealand’s farmers. For one, farmers say the proposals are far different than recommendations put forward by industry groups that have been working with the government for two years on the plan. That in itself has created a lot of confusion and mistrust. Many also feel the goal of the policy is to ultimately lower the country’s livestock numbers by driving farmers out of business as effective methods to reduce livestock methane emissions are extremely limited. The government’s own estimates show the tax could cost dairy farmers -5% of their total profit and output while profitability and output for sheep and beef farmers could shrink as much as -20%.
Andrew Hoggard, a dairy farmer and the president of Federated Farmers, New Zealand’s leading ag lobbying group, said he feared farmers might be driven to sell their land to forestry companies, drying up the job market and diminishing small town communities centered on farming. According to the New Zealand Meat Industry Association, sheep and beef farmers and the meat processing and exporting sector collectively generated $12 billion in income per year and accounted for more than 92,000 jobs, almost 5% of New Zealand’s full-time workforce. Some also argue the policy could actually backfire and raise global greenhouse emissions if production is shifted to countries that are less efficient.
Prime Minister Arden has said she thinks New Zealand’s farm emissions policy could serve as a blue print for the rest of the world. But Arden is also up for reelection next year and some believe the tax could cost her and the ruling Labour Party the election, especially considering that farmers represent the country’s largest industry and have significant political clout. If they are booted, it could also mean the tax gets scrapped. (Sources: ABC, NZSouthland, The Fence Post, BBC)
