LIC’s annual meeting saw the board and senior leadership team reflect on a tough past season where the dairy improvement co-operative faced both financial and operational challenges.

Reflecting on the co-operative’s financial performance at the meeting on September 18 in Hamilton, LIC chair Corrigan Sowman emphasised LIC’s ability to deliver a sustainable profit and a solid return for its shareholders despite a challenging economic environment.

“We are proud to have closed the year with a respectable profit of $7.7 million and a total dividend of 18.84 cents per share, thanks to prudent management and a strong balance sheet with no debt.”

Sowman acknowledged the headwinds the sector may face but expressed confidence in LIC’s resilience and future potential.

“Our co-operative is well-positioned for the challenges ahead. We remain focused on our core purpose: delivering value for our farmer shareholders. This goes beyond short-term gains – our decisions today shape the future of New Zealand’s national herd.”

The co-operative forecasts underlying earnings of $16-22m for 2024/25, barring any significant external factors. 

LIC chief financial officer Brent Mealings said there was an understandable reaction to the significant decrease in Fonterra’s forecast milk price by its shareholder customers in August and September last year. 

Total revenue was down 3.3% on last year driven largely by a decrease in demand impacting volumes across key product and service lines. 

“Our response was also to focus on controlling our costs across the business. The after-tax impact of the semen quality issue during the year was $1.5m.”

He said there were positive signs in the sector, where confidence is slowly rebuilding.

“However, it will take time for us to see the results as the short-term cash constraints on farm continue and farmers take a considered approach to spend.”

This was challenged by one farmer in the audience who questioned the senior management team on its performance.

Sowman told him the board took responsibility for past performance issues with sexed semen and while he did not want to make excuses, he said the past two to three years had been tough on all businesses.

“We’re both farmers and we know the extraordinary period of inflation that we have been through. The reality is, we haven’t had free cash.”

He was confident that the most recent investments LIC had made will lead to improvements in revenue.

“Will they ultimately respond to the headwinds we have with a declining cow population, I do not know that and we will have to continue to work hard on that.”

LIC chief executive David Chin acknowledged that the co-operative did not live up to being operationally excellent last year because of the issues it had with semen quality issue.

“Following a thorough investigation, we’ve been working hard to implement improvements across the semen processing business.”

He said winter mating went without a hitch, and he is confident there will be a successful calving season this spring. 

“The performance of our sexed semen product has also been very good. 

“Last spring, the non-return rate of fresh sexed semen was only 3% below conventional and over winter mating the non-return rate was 1.9% below the performance of conventional semen, for straws inseminated in the same herd on the same day.

“This is really pleasing as sexed semen will play a big role in accelerating genetic gain and allows farmers to get more heifer replacements from their best cows.

“Except for the semen quality issue, it was a very good year operationally for LIC.”

The meeting saw Mike O’Connor elected as director for the North Island region and Tony Coltman as director for the South Island region as well as Kirsten Watson elected as the Upper North Island territory shareholder reference group (SRG) representative.

The SRG is an elected and appointed body of shareholders established to promote shareholder interests and assist LIC to deliver on its purpose and vision.

A new, rapid and cost-effective test for bovine tuberculosis being developed by Otago University could cut diagnosis times from 72 hours to about an hour.

The three-year project has just received $1 million in funding in the Ministry of Business, Innovation and Employment’s latest Endeavour Fund investment round.

Tb is caused by Mycobacterium bovis and is a highly infectious livestock disease that costs Aotearoa’s primary sector $160 million a year. 

Otago University Rutherford Discovery Fellow at the Department of Microbiology and Immunology, School of Biomedical Sciences, Dr Htin Lin Aung, said the current testing regime for Tb requires a 72-hour turnaround, specialist equipment, skilled staff and laboratory infrastructure, which prevents diagnosis of the disease on farm and leaves infected animals in their herds while the results are pending.

He hopes the new test will reduce that time to one hour.

“This is a very lengthy process if you are the one doing the test or if you are the farmer waiting for the result,” Aung said.

It would also eliminate the need for skin tests, which can produce false-positive and false-negative tests, and the blood test, which confirms if the animal has Tb or not.

“I think it could be a game-changer because our test will be very quick, and it doesn’t have to be a vet or a skilled technician – farmers can do it as well.”

The test will also be non-invasive with no blood samples taken or injections, which the current testing system relies on.

Aung said they hope the test they develop will be similar to how people tested themselves for covid-19, which used a nasal swab, but based on a different technology.

Business development manager and patent attorney Tomas Ribeiro said that as well as providing farmers with a much faster diagnosis, it will be better for animal welfare.

“If you have a positive test in a large herd and you have to wait three to four days to get that result back, you have to cull the entire herd.”

A quick diagnostic test would allow the farmer to quickly separate those that test positive and those that are negative, and prevent the mass culling of herds, he said.

“There’s a massive economic benefit and there’s a massive animal welfare benefit.”

Aung said they will be working closely with stakeholders over the next three years as the test is developed and moves into the trialling stage.

It could also be used overseas to fight Tb and could serve as a platform technology for the detection of other pathogens in animals as well as humans.

“It has a lot of potential and we’re very excited by it.”

While it is a three-year project, the science behind it is well developed and the team is optimistic a prototype could be ready in 18 months.

FoodWaikato’s spray dryer is about to undergo a $7 million upgrade as it eyes expanding its colostrum collection and processing capabilities.

The company, located at the Waikato Innovation Park in Ruakura, is in the middle of colostrum collection as dairy farms across the country calve their cows.

The plant upgrade will allow the colostrum to be “taken to bits”, Food Waikato chief executive Trevor Lock said.

The best “highly bioactive” parts of the colostrum will be processed into food supplements for gut health by plant owner, South Auckland-based New Image Group, and the rest used to create other products starting in 2025.

“We’re moving from dietary supplements – formulated products which we are making right now – to true nutraceuticals, where we are making soft claims.”

A research programme is in place to support those claims and $4.5m is being spent on research and development over the next few years.

Lock said they are looking for more farmers with the aim of having 100 farmers supplying the dryer with colostrum by next year.

They are also investigating the viability of collecting from farms that autumn or split calving.

Colostrum is the first secretion from a cow’s udder after giving birth and farmers are not permitted to put it into the milk supply until eight milkings have been completed – which is usually around four days.

Apart from Westland Milk and New Image, no other major dairy company collects colostrum. It is costly and its small volume makes it difficult to process in the large dryers most modern dairy companies use, Lock said.

“It’s very difficult to make. It’s difficult to collect and it’s difficult to manufacture.”

In their first run using the dryer, they processed the colostrum and tested its viscosity before drying it and it came out at 700 centipoise.

“It was like a thick paste. It’s very sticky, it’s very difficult.”

By comparison, regular cow’s milk has a viscosity reading of 20 centipoise, he said.

The flipside is there is enormous market demand for colostrum-based nutraceuticals. This is because the main global exporter, the United States, stopped exporting the product.

“Outside the US, New Image would be the largest colostrum user in the world,” he said.

The company exports its product to 26 countries, turning colostrum into a powdered drink for both adults and children to promote gut health.

The demand along with the factory upgrade has enabled Lock to hire four more staff. 

The expansion means the company is now operating 24 hours a day, seven days a week. 

The factory currently has a single dryer that can produce 500kg an hour and operates on four shifts with two people working on each shift.

When it processes nutritional formulas, it processes around 400kg an hour.

It also has a “wet side” operation that makes up all the ingredients for the nutritional formulas. That crew has two people and is about to double. Next year, he hopes to add two more as the operation moves to 24/7 too.

The company has a chequered history, having been put into liquidation last year before being purchased by South Auckland-based company New Image Group (NIG) in December. Lock has 25 years of experience in the colostrum market, having worked on developing the process to develop colostrum. 

Lock also has a fraud conviction and spent time in prison, which he is open about, saying he “did his time”.

Last year the company collected from four farms in South Waikato and this has expanded to more farms for this calving. Lock contracted the spray dryer at the Innovation Park on behalf of New Image to manufacture the colostrum, making 2 tonnes for the market.

Lock then put a business case to New Image to buy the plant and employ Lock to run it.

The colostrum collection does not interfere with the farmer’s relationship with the milk supplier, nor does it prevent the calf from getting all the colostrum it needs. 

The payment for the colostrum is based on the product’s immunoglobulin G (IgG) levels measured from three milkings done while the cow is producing colostrum.

The higher the IgG, the higher the payment. At the top end, the company pays $3.35/ litre for a 25-28 IgG level per litre and this is usually measured during the cow’s first and second milking. At the bottom end, it pays $1.35/L when the IgG is at 10-12/L.

The average payment would be $2.25/L from around 18L of colostrum from the first 36 hours since calving.

“If a farmer has 600 cows and they earn $2.25 a litre, it’s worth around $43.20 per cow for six weeks’ work.”

It adds up to around $25,920.

“We have one farmer in Southland who will earn in excess of $100,000,” he said.

“It’s good for the New Zealand farmer.”

On farms outside the tanker pickup area, the colostrum is bagged and frozen while it waits for collection for transport back to the dryer.

During the times of the year when cows are not producing colostrum, the major dairy companies use the dryer to test and trial new products and make specialised nutritional products.

Once the upgrade is completed, Lock also plans to process milk for specialised ingredient  products for NIG.

The dryer is also collecting and processing goat’s milk products via NIG, providing income for those cash-strapped farmers and supply security for them.

It also provided a lifeline earlier in the year for sheep-milking company Maui Milk, agreeing to process and sell the milk for 11 of its suppliers.

“Where this plant was going into liquidation into December, we have turned it around completely into a significant profit-making entity, hired more staff – the lights are staying on.”

LIC is collaborating with United States-based precision breeding company Acceligen and the Bill & Melinda Gates Foundation to breed heat-tolerant and disease-resistant dairy cows for sub-Saharan Africa.

The initiative seeks to address food insecurity in the region by providing high-performing dairy animals to help grow sustainable dairy markets.  

It will combine LIC’s knowledge in breeding efficient dairy cows for pasture-based systems, with Acceligen’s cutting-edge gene-editing capabilities to produce animals that can produce more milk than native species. 

 LIC chief executive David Chin said the co-operative is proud to be involved with the initiative.

“Collaborating with Acceligen allows us to work with the very best in the world, whilst showcasing our advanced breeding capability to global markets.  

 “The initiative supports us to stay at the forefront of the latest technologies and is an opportunity to leverage international expertise with positive benefits for the dairy sector.”    

It is the first time LIC has embarked on a large-scale collaboration using gene-editing technologies, he said.

It successful, it could lead to similar kind of projects. It will also give LIC a good understanding of how gene editing works and the consumer acceptance of it.

“We’ll be in a much better position if the laws do change to understand how it could be used, how it could be adopted and what the technology is capable of.”

Embryos bred from LIC’s world-class pasture-based genetics will be sent to the US, where Acceligen will perform gene edits on the stem cells. 

These embryos will be sent from New Zealand to Acceligen in the last quarter of this year. The gene-editing process and birth of the calves that will grow into elite sires is expected to run until January 2026 and at that point, the bull calves are transported to Brazil where they are reared and their semen collected.

The semen straws are expected to be ready for sale in Africa through a distributer network by mid-2027.

The embryos will then be transferred into dams that will give birth to gene-edited sires. The bull calves will be transported to Brazil for rearing. The semen will be collected from these sires and sold into Sub-Saharan African markets through a developed distributor network.

Chin said the calves are being reared in Brazil for practical reasons. Brazil has a good reputation for rearing animals, it is a cost-effective option and most importantly, the country is well placed to export to other global markets including Africa.

The NZ government has committed to legislative change to enable the greater use of gene technologies, ending the effective ban on gene editing by the end of 2025. 

Chin said gene-editing technologies could help give farmers even more tools to improve their productivity and efficiency and it was something they have to explore.  

“By being involved, we do a lot of learning, we understand how this is going to work and if this is something we want to pursue, if this is something that could be interesting, then we’re in the best-placed position because we’re working with world leaders in this environment.” 

The five-year project is funded by the Bill & Melinda Gates Foundation with a budget of US$5 million ($8.3m). 

The organisation invests heavily in agriculture development to support farmers in Sub-Saharan Africa in their efforts to sustainably raise healthy, productive animals. 

Maize growers are playing a waiting game regarding their planting intentions for this spring after a difficult past season marred by low prices and falling demand.

Waikato Federated Farmers arable chair Don Stobie described those intentions as “the $64,000 question”.

“A lot of them are stepping back and having a deep think about what they are going to do going forward. A lot of growers at the moment are saying they are going to reduce their planting intentions for the coming season.

“The other thing they are talking about is any ground they do plant, they are wanting a contract on for the crop.”

This will give them surety of price at harvest time because so many got badly burned last season from the low price and lack of demand, he said.

Corson Maize national business manager Graeme Austin described the silage industry as static and the grain industry as hesitant.

“There are a whole lot of things happening, they are not sure about contract prices yet, so end users haven’t committed to contract amounts and growers are waiting to hear what contract prices will be.”

The other issue at play is the shortage of natural gas, which companies such as Vittera use to fuel their maize grain dryers, he said.

The contracts these companies for gas have ceased, meaning they will have to purchase the gas on the open market.

“The likelihood is there will be gas available, but we don’t know what the price will be.”

Stobie said the early spring will have little impact on planting dates as farmers are wary of an early spring cold snap that could affect a freshly planted or emerging crop.

“Growers will be wanting some surety that someone is going to want their crop later on. I wouldn’t envisage that there will be many people growing without a contract this season.”

One positive for the maize growers is they could benefit from Fonterra and Nestlé’s push to reduce Scope 3 emissions, he said.

“Maize grain has a very good emission intensity rating compared to palm kernel and currently we import around 2 million tonnes of palm kernel into New Zealand. If they reduced that by even 10%, that would be potentially 20,000t of grain farmers could swap to using.”

A petition has been launched to stop imports entering New Zealand from countries that allow farming practices that would be illegal in this country.

The petition, by animal law expert and University of Auckland Associate Professor Marcelo Rodriguez Ferrere and supported by Animal Policy International, was launched at an event at Parliament.

It urges the government to enact legislation ensuring all imports meet New Zealand’s domestic animal welfare standards.

“In my view, allowing imported animal products with lower standards than NZ undermines the spirit and effectiveness of our laws and our commitment to animal welfare, and creates an unfair double standard that privileges overseas producers over domestic farmers,” Ferrere said.

Animal Policy International investigated egg farms in India earlier this year, filming hens confined in battery cages, raising concerns about these eggs or egg products imported into the New Zealand market at a time when NZ and India discuss the potential for a bilateral trade agreement.

The footage showed overcrowded conditions with up to 10 hens crammed into cages typically used for 2-3 birds, hens with injuries, swollen glands and beaks, dead birds left lying around the cages and insufficient and poorly maintained water access points.

Battery cages have been banned in NZ since 2023 due to animal welfare concerns.

Animal Policy International co-executive director Rainer Kravets said after he witnessed the conditions in India for himself, he was sure New Zealanders would be horrified at what those hens endured.

“New Zealanders have made it clear that they don’t support cruel farming practices like battery cages. Allowing cruel imports produced under conditions we’ve banned here undermines our values and undercuts our farmers. It’s time to close this loophole and ensure all products in our market meet our ethical standards.” 

New Zealand imports a large number of products produced under conditions that are illegal domestically, such as the use of battery cages for egg-laying hens, sow stalls for pregnant pigs, and the mulesing of sheep.

This was highlighted in a report released in March, Closing the Welfare Gap: Why New Zealand must apply its animal protection standards to imports.

NZ Pork chief executive Brent Kleiss backed the report’s findings, saying they align with what the organisation has been advocating for some time.

“We import pork from 22 countries and those countries – they are providing pork that’s been raised to lower standards of care than what we expect of our own producers,” he said at the time.

Care is needed when pursing low-methane genetics in livestock so it does not disrupt the genetic gains already achieved that increase profitability for farmers, AbacusBio director Peter Amer says.

Speaking in a webinar on breeding for low-methane-emitting animals, he said there was already a good story from sheep and cattle breeding and it is important not to disrupt these gains in the pursuit of adding on low-methane genetics.

As selection emphasis shifts away from traits that drive profitability onto a new methane trait, there is an opportunity cost as more and more emphasis is put on the new trait, he said.

Some have questioned whether selecting animals for feed efficiency is a better option than selecting for methane.  

If a large, inefficient animal is replaced by a smaller, more efficient one, it could lead to a feed surplus, which the farmer would then feed to these or other animals.

“If we improve feed efficiency in a pastoral situation, we may not have any material impact on the national inventory or overall emissions,” he said.

This supported the argument for pursuing a methane trait, which improves both emissions and intensity and gross emissions.

Modelling showed that the additional benefits of this trait for the sheep, beef and dairy industries in New Zealand and Ireland came to 1-3% per decade, he said.

He believed this was a realistic amount that can be delivered through genetics.

AgResearch scientist Suzanne Row said the tools that are being developed to measure methane are becoming more advanced. 

Low-methane genetics is a relatively benign trait that is available for selection and we just need to get on and measure it, she said. In sheep, every breeder can get a breeding value for methane emissions.

“There’s still a barrier, and at the moment we’re measuring using chambers.”

Those chambers are transported using a 3 tonne trailer and the resulting transport difficulties mean they do not have the scale yet for a genetic trait.

One of the alternatives scientists have been working on is an oral swab, where DNA is extracted from the swab and analysed. The predictions from this oral sample appear to be just as good as if it were taken from a gastric tube.

“That’s really exciting when we think about larger animals, animal welfare and non-invasive samples.”

Low-methane sheep have been bred for 15 years and scientists now know the differences between the high and low emitters and what the indicators are for what is occurring in the animal as well as potential predictors.

The webinar was organised by the New Zealand Agricultural Greenhouse Gas Research Centre and Irish agricultural research and development agency, Teagasc.

New Zealand is now viewed as an outlier for global shipping as cargo movers grapple with the soaring cost of getting products from port to port.

The country is seen as an expensive place to do business from a shipping operator’s perspective, Zespri shipping manager Alasdair MacIntosh told HortNZ’s annual conference in Tauranga.

MacIntosh is also a representative of the New Zealand Cargo Owners Council. He said the shipping industry is facing multiple challenges as it battles ongoing costs and longer travel times.

Nationally, the council is also concerned about poor productivity, with a lack of improvement post-covid.

A lot of this is due to port operations, labour requirements and the uncertainty of when vessels will arrive, MacIntosh said.

“Overall, nationally we are about 20% down since covid – Auckland 38%, Tauranga 14% in terms of their crane moves at the moment.”

The industry is coping with the amount of cargo coming through and with a weak economy and high cost of living. He said he is concerned about low productivity once the economy starts improving and demand increases.

“Where does that leave us?  We can just see more congestion coming down the line.”

Ships are going to get bigger as larger ships are more fuel efficient and are better for the environment in terms of carbon produced per tonnes of cargo carried.

Nationally, the country faces major infrastructure challenges to be able to service these larger ships.

“We need to be in a position where we can expand, where we can make places for larger ships coming through, more efficient ships and more efficient movement of cargo.”

Most ports in New Zealand will not be able to take those larger vessels apart from Auckland, Lyttleton and Tauranga.

“Perhaps it goes offshore, perhaps Australia becomes a hub for New Zealand, and we end up having to go through Australian ports to reach the rest of the world.”

The issue needs to be depoliticised and cannot be resolved if consecutive governments continuously change or block plans.

“We need to have an infrastructure policy in place that covers at least 30 years so that we can have some good budget [funding] put aside to make sure that each of these projects that needs to be addressed does have the attention it needs and not just change every three years when a new government comes in.”

The council is working with transport agencies and the government to develop this, he said.

The sentiment was backed by Zespri’s executive officer for sustainability, Rachel Depree. 

As consumers and markets became more climate conscious, New Zealand has to be well positioned to take up low-carbon shipping technology, she said.

“We’re small, down under and far away but very reliant on shipping to drive export value.”

There is also a limited supply of low-emissions fuel and NZ risks missing out if it does not act now.

The country could miss out on low-emissions supply chains and routes as larger trading partners move into this space, she said.

“This of course could resolve in higher emissions pricing in the future, or even reduce servicing by shipping providers including the risk that we are left with the high carbon options to ship product to market where we will essentially be paying other countries to decarbonise.”

Lowering these emissions reduces costs and helped contribute to the government’s goal of doubling export values.

Ports also need longer and deeper berths to accommodate larger ships and NZ trails other countries in transport policy investment, she said.

The industry needs all-government support to co-ordinate industry and government efforts around better port infrastructure, alternative fuels and increasing domestic fuel supply.

“We know we need to be infrastructure ready if we want to bring these ships to NZ.

“We need to take on this challenge if we are going to continue to offer high value products to the world and support NZ’s enviable agri-economy.”

The government’s tight timeframe for updating the rules around genetic technology is a case of moving “too far, too fast”, says a Hawke’s Bay grower.

Speaking in a panel discussion at HortNZ’s annual conference in Tauranga, Scott Lawson said the sector had everything to lose including market access and grower returns if the rules are changed.

“I don’t want to see a horticultural industry and all the good work we have  done crushed by poorly thought-through regulation that hasn’t been canvassed or discussed by the wider community.”

The starting point for the new legislation has to be that anything that puts at risk the trust and clean green image of NZ is too much of a risk to take, he said.

The government plans to end what is effectively a ban on GM and GE and create a dedicated regulator to ensure the safe and ethical usage of biotech and streamline the approvals for trials.

The government has signalled that it wants to have the legislation completed by 2025.

Lawson said NZ has to be aware of what no longer being GMO-free will do to its markets. 

“Zespri, Fonterra and many companies leverage off this GMO-free position and internationally we have to sign GMO-free declarations on phytosanitary for apples going to India – all of these emerging markets are very concerned around that.

“We need to be very aware of what our consumers think internationally and that feedback we’re reliant on.”

It also raises ethical questions around whether growers could face future restrictions around what they can and cannot grow due to patents.

He said the European Patent Office is accepting patents for gene-edited feed proposals and when people start patenting nature’s biology, that limits what breeders called “breeders bounty” – the gene pool that growers choose to grow from. 

It has caused a huge outcry among European vegetable seed growers who fear it will lead to growing restrictions.

It raises questions around who owns nature’s biology and whether NZ growers will have to recognise these patents under World Trade Organisation and other trade rules.

“We could end up selling our sovereignty,” he said.

Māori Kiwifruit Growers chair Anaru Timutimu said Māori growers have a cautious but open attitude towards having discussions around GE.

Timutimu said in his conversations with the Māori sector, they wanted protections in place for the original species.

“The whakapapa of that original species is really important.”

Turners & Growers chief executive Gareth Edgecombe said if GMO labelling has to go on a product, it will be real barrier for consumers globally.

He said NZ has a brand of high trust and high quality and the settings have to be gotten right.

It is such an important long-term step for NZ and it will still be decades before new genetically edited products will be in the marketplace.

“With that in mind, it’s more important that we get all of the settings right and bring everyone along and take our time to do that.”

BioTechNZ executive director Dr Zahra Champion said the regulations as they stand are 28 years old and are unsuitable for managing new technologies and need to be updated.

One of the main challenges in the new legislation will be how these new technologies are defined, she said.

“This is where the tension really is. It’s not about ‘Should we update the regulations?’; it’s down to those definitions.

“Where do we feel comfortable where we start calling it a GMO? I believe that is going to continue to be the big question.”

NZ is also fortuitous that it is not an early adopter of this technology, allowing lawmakers to learn from the mistakes of others.

The legislation will go to a select committee early next year followed by consultation. Champion urged growers to make submissions at that time.

“We do need to move forward, the regulations are outdated so we’re going to have to do something and we can’t just sit around and procrastinate and let those regulations sit there for another 20 years.”

Future generations of New Zealanders risk having to pick up the costs of climate mitigation if the government’s Second Emissions Reduction Plan (2026-2030) goes ahead, Parliamentary Commissioner for the Environment Simon Upton says.

The low-cost approach advocated in the plan runs a high risk of passing costs to future generations, he said in his submission on the plan.

“At the same time future generations will inherit a vastly expanded forestry estate that will have to be maintained in perpetuity, effectively removing any option value the land may have.” 

The plan is a key tool for implementing the government’s climate strategy. Submissions on the draft plan closed on August 25.

The proposed plan will almost certainly be insufficient to meet the third emissions budget and may miss the second budget and even the first, depending on the impact of the current dry year and forestry harvest, he said.

“In falling short, the plan will pass the bill for additional action to meet the 2050 target and ongoing maintenance to future generations.”

Upton also questioned the assumption that emissions reductions technology will inevitably be much cheaper in the future.

“There is no guarantee that the cavalry of cheap technology will come charging over the hill as is implicitly assumed by this plan.”

Upton said more needs to be made of existing options that can bring down emissions. These practices, which focus on improving the efficiency of production include reducing stocking rates while maintaining output, reducing inputs, improving animal genetics, once-a-day milking (for dairy) and raising bobby calves for beef (for sheep/beef).

More incentives are also needed for farmers to preferentially purchase low-methane sheep to drive up demand. These genetics have to be linked with productivity enhancements or it is unlikely they will be adopted. 

As the first domestic target for biogenic methane emissions is a 10% reduction by 2030, there is work needed to ensure policies are in place to drive the changes needed to achieve this target, he said.

“Currently the only incentive driving reductions in agricultural emissions is the ETS [Emissions Trading Scheme], which is encouraging sheep and beef land to be converted into forestry.”

Agricultural emissions pricing needs to be carefully designed and communicated so farmers understand why they are being asked to pay.

“Whilst I believe the science on methane to be well established, the communication of this science will be an important challenge the government must carefully address to ensure buy-in for any pricing system. 

“The key issue the government will need to grapple with is why it is allowing fossil fuel emitters the right to offset emissions but not agricultural emitters. In my view, using forestry to offset agricultural methane emissions would be a far more appropriate use of whatever offset capacity we have.”

Its nature as a short-lived gas made offsetting emissions using forestry a responsible mitigation option. It would not fall victim to the issues with offsetting carbon dioxide because of the commensurability between the lifetime of the cooling effect of a pine production forest and the lifetime of the warming effect of livestock methane. It meant there would be no need for ongoing planting after a forest had been established, he said.

“Furthermore, if the herd size were reduced the area forested could also be decreased, maintaining the option value of the land for future generations. 

“It would therefore make sense to enable farmers to offset their methane emissions using trees.”

He recommended the government build in a much greater margin for error into its emissions budgets, saying unlimited forestry offsets cast a “long shadow” over transitioning to a low emissions economy.

“My central recommendation is therefore to decouple forestry from the ETS and use alternative incentives to drive afforestation.”