Jim Sutton Speech: Federated Farmers annual meeting,Auckland

President Tom Lambie, chief executive Tony St Clair, Ladies and Gentlemen: Earlier this year, those of us working in agriculture were criticised for not providing leadership, for not standing up and saying agriculture is important.

I was interviewed about this later on and commented that news tended to be just that: new. The Minister of Agriculture saying agriculture was important didn't tend to meet that criteria. In fact, it's so self-evident as to be boring.

But I think it does raise a point worth considering.

Do people in New Zealand understand our primary industries?

In the old days, everyone knew someone on a farm, they used to spend holidays on farms. Today, our population is highly urbanised. Rural people are about 15 per cent of the population. Fewer than half of these are actually farmers or farm workers.

That's led to some describing agriculture as a "sunset industry".

We here today know that's not true. Agriculture is the leading edge of the knowledge wave economy. Productivity growth in the rural economy far outpaces that of the general economy, because of the swift adoption of new techniques and new technology.

The Government knows that.

Our land-based primary industries are a key sector of the economy being looked at closely by the Growth and Innovation Advisory Board, which is working with ministers to identify ways to significantly boost our economic performance.

Primary industry is vital to the wellbeing of our country. That's why farmers' behaviour is under so much scrutiny. Your activities have a huge impact on others' lives, directly and indirectly. When you're number one, you get the full force of people's attention ? both good and bad.

And because we have such an urbanised population now, the job of explaining farming and agriculture to the rest of our fellow citizens is that much harder ? and that much more important.

There are a lot of images of farming and farmers out there, from the Speights and Toyota ads to the one about the perpetually grumpy farming community as reported in one of the business papers last week.

It is easy to hunker down on the farm and feel like every new thing that comes past is an extra burden targeted especially at you purely to make your lives miserable. But there is a bigger picture than that.

Climate change is a reality. It is the world's biggest environmental problem. We have to do something about it. That's what the Government is doing by ratifying the Kyoto Protocol, in which more than 100 nations have agreed to work together to get the problem under control.

The global mean temperature went up by about 0.6 degrees in the last century and a half. In the coming century, it is projected to rise by a further 1.4 to 5.8 degrees.

This is not within the normal range of climatic fluctuations. The current concentration of greenhouse gases in the atmosphere is not within the normal range, and it is rising. The overwhelming weight of scientific opinion is that this is a problem; it is substantially caused by human activity; we need to do something about it.

Yes there are a handful of scientists who hold a contrary view. There are also some scientists who believe that GE foods will poison us; some who dismiss the theory of evolution; until comparatively recently, some still believed the earth was flat.

They just may be right. But to rely on the correctness of an increasingly isolated minority view would be reckless wishful thinking, for which our greatgrandchildren could pay a fearful price.

The precise effects on New Zealand are still uncertain, but temperatures are likely to be higher and the effect on water resources will be significant. Rainfall is expected to increase in the west and decrease in the east. Floods after major downpours are expected to become more frequent and more severe.

There may be some initial benefits for parts of agriculture. A warmer climate would probably increase the growth rate or range of some crops.

But climate change threatens our agriculture too. The biggest impact is likely to come not directly from global warming, but from the increased frequency of extreme weather events, cold as well as hot. Besides the risk of more floods and droughts and violent windstorms, some crops may need to move south if they need cold winters, such as kiwifruit. Biosecurity is likely to come under increasing pressure, especially from subtropical pests and diseases. Sea level rises could create further problems with saltwater intrusion into aquifers in regions such as Hawke's Bay and Canterbury.

In the longer run, the effects of climate change on agriculture are predicted to be overwhelmingly negative.

Doing nothing would mean sleepwalking into these hazards. For a country as dependent on primary production as ours, that would be gross negligence.

There isn't another developed nation that depends on a stable temperate climate for its prosperity as much as New Zealand. We still buy our place in the developed world with grass. On a global scale we make a relatively small contribution to the emissions that cause climate change. But we stand to suffer economically from the effects much more than most. Doing nothing is not a solution. In fact, it sets us up for paying a lot more.

We are a major supplier of food to world markets, many of them increasingly influenced by perceptions of environmental integrity. A positive response to climate change underscores our reputation for that. Ducking responsibility on climate change will not go unnoticed.

Our trading partners are joining in to combat climate change, both within Kyoto and outside it ? both the United States and Australia have publicly committed to major programmes to address their emissions, despite declining to ratify the protocol at this stage. Australia has publicly said it will meet its Kyoto target ? without ratifying the protocol, which would have given it access to mechanisms which make it easier and cheaper to achieve.

Of course, if their example in not ratifying is widely followed, the global effort would fail. Some new, more drastic approach ? possibly enforced by trade sanctions ? would surely follow.

This is not something Labour is inflicting on you ? this is something Governments of both the left and the right agree on. It was a National Party cabinet minister that signed New Zealand up to this, and a Labour-led Cabinet that assessed it and recognised the need to continue with it.

Work is already being done in this area: the National Science Strategy Committee on Climate Change calculates that from 1999 to 2001 the total investment in climate change research was $23.5 million a year ? 90 per cent of that from the Crown.

In the financial year to last month, Government spent $3.263 million on agricultural greenhouse gas emissions research, with that rising to $4.715 million this financial year. We intend Government spending of this order to continue.

There has been a more than five-fold increase in government funding of agricultural greenhouse gases research since 1999.

So you are not funding research on your own ? the Government is carrying its weight on this as well.

The Government acknowledges that pastoral agriculture is already spending money on agricultural emissions abatement.

However, this funding does not meet the levels of funding that have been determined as necessary. The O'Hara team have determined $8.4 million as the optimum level.

That is why the Government has proposed this agricultural emissions research levy.

The levy should be no surprise to farmers. The policy preference for an industry-funded research approach in lieu of an emissions charge has been publicly discussed by ministers since at least 2001. An effort was made throughout 2002 to engage methodically with farmers on the issue.

It was formally announced in October last year that pastoral agriculture would be exempted from any emissions charge for at least the first commitment period of the Kyoto Protocol, provided the sector invests in research to identify options for reducing agricultural emissions. The Government was very clear at the time that it retained the option of imposing a research levy if the funding committed by industry fell short of what was required.

Representatives from Federated Farmers' national office have been part of the groups that have discussed this issue for at least a year.

The issue now is not whether there will be a levy ? that decision has already been made. As to the form of that levy, your industry representatives on the Primary Industries Council made it clear to ministers that they preferred ? if industry funding was deemed necessary ? that it be in the nature of a tax rather than a levy voted for by farmers. This was despite it being made clear that only the latter would create a clear prima facie claim by farmers to the ownership of any intellectual property created.

The issue is how will it be collected, who will administer it, and how will it be spent? Farmers have an opportunity to direct that research to areas that will deliver the most benefit for them and their livestock. That is what the current round of meetings have been about, and what this document is all about. You can make submissions on it now.

The proposed levy is an investment in the future of pastoral farming. It enables pastoral agriculture, the biggest source of greenhouse gas emissions in our country, and the most obvious direct beneficiary of successful research, to help find ways to mitigate the level of emissions.

In return, farmers have been exempted from emissions charges for at least the first commitment period, which ends in 2012. These emissions charges, which will apply to other industries, would have cost farmers many times more.

The emission charge to an average New Zealand pastoral farmer could well have been in the order of $6000 ? if applied only to the increase in emissions since 1990, or between $30,000 and $40,000 if applied to all farm-sourced methane and nitrous oxide.

The Government, on behalf of the taxpayer, has accepted these liabilities. We are also providing similar relief to other large emitters through negotiated greenhouse gas agreements, in return for their agreeing to move methodically toward "world best practice" in their respective industries.

By these means, New Zealand will play its part in combating the world's most serious environmental problem, without seriously impacting the competiveness of our essential industries.

So, rather than paying charges, you are being called on to fund research. And if the research is successful, you stand to gain financially.

Methane emitted by livestock is wasted energy. Reducing emissions is likely to be a matter of improving food conversion efficiency, and therefore productivity. And the science behind this will be owned by New Zealand, with potential application and market value worldwide.

This for an amount roughly equivalent to your Federated Farmers subscription, or less than the cost of a packet of cigarettes a week.

Ladies and Gentlemen: no-one likes paying more for anything. But I do not believe the amounts being talked about at the moment ? 9 cents a sheep, 54 cents a beef cattle beast, and 72 cents a dairy cow - are too much to ask, when it is the future of pastoral agriculture in New Zealand that is at stake.

We all want our children to have the sort of opportunities we had ? at the very least ? and we have to tackle climate change, in partnership with other countries, to do that.

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