What the new government means for dairying

As we publish this article it’s far too early to give a definitive answer on what the new government has in store for our industry, but here are the main points/issues that appeared in the media in the past 6 months regarding dairy farming and policy-talk from the government.

WATER QUALITY AND IRRIGATION

The Labour Party promised during the election campaign to tax irrigators in order to fund the clean up of rivers but this has since been scrapped during negotiations with NZ First to form the coalition. This could be seen as a small win but it’s balanced out by talk of also putting an end to the Crown subsidies for new irrigation schemes. Set up in 2013, the National government had committed to providing up to $400 million, of which $120m has so far been spent. The new Labour government has said it would honour the existing Crown Irrigation investment commitments but after that, who knows. Those in drier areas not known for naturally producing lush green pasture will feel the effects first and hardest.

REDUCING DAIRY FARMING

Prior to the election, the Green Party said it would put together a package for farmers to assist them in moving to more sustainable practices or transition away from dairying altogether, and (if it were in government) would invest in a Sustainable Farming Fund.

REDUCING THE NUMBER OF COWS

This idea from Labour hit the news in early June but just over a week later the sentiment had shifted from a hard and fast quota to talk of ‘herd management’. Even the Greens have since said they will not be pushing to reduce current herd numbers but do favour economic incentives for farmers who adopt a value-over-volume industry.

EMISSIONS TRADING SCHEME

In late October it was announced a deal had been struck between Labour and NZ First that included bringing agriculture into the Emissions Trading Scheme. No further movement as yet but the fear is this extra cost would make dairying (all agriculture, in fact) less competitive on a global scale.

IMMIGRATION AND MIGRANT WORKERS

Labour’s immigration policy remains the same post-negotiations as it was during the campaign. Under this policy it is estimated that net migration will fall by 20,000 to 30,000 a year, mostly by limiting the number of people granted student and work visas. The dairy industry relies heavily on migrant workers, making up an approximate 10% of the workforce, so a drop in net migration will likely affect farmers’ ability to retain their best migrant staff. With many NZ citizens moving from rural areas to cities, migrant workers often fill the gap left in the regions.

As there hasn’t been much actual movement on any of these issues yet there’s not much more we can do other than wait-and-see how new policy shapes up and rolls out over the next three years.