Keith Woodford on Carbon vs Sheep & Beef

Wednesday 27 Oct 2021

Carbon and forestry, increasingly linked to overseas investors, continue to outmuscle sheep and beef but nothing about carbon is simple – I had intended this week to move away from forestry to other topics. But once again, I have been drawn back to forestry because it is the biggest issue right now facing rural land-use.

For those who are farming sheep and beef there is the disconcerting reality, but also in some cases exciting reality, that carbon farming is now the most profitable land use.

Somewhat ironically, this changing land-use is also relevant to the dairy industry, which in combination with the other pastoral land uses is supposed by 2030 to reduce methane by 10 percent. It is looking as if much of this might now come from the decline in sheep and beef.

When I started writing this series on carbon farming back in July of this year, I used a carbon price of $48 per tonne, but right now it is sitting at $65. I have been rerunning some spreadsheets in recent days and inevitably the economics of carbon farming now look even stronger.

Given that the ETS is controlled by Government, there is no certainty as to where prices will head long term. But as I have said previously, the ETS lies at the core of New Zealand’s climate policy, and the ETS cannot achieve its goals unless the carbon price climbs considerably higher. The Climate Change Commission made that point very clearly. The only alternative is for the Government to ditch the ETS in its present form and shift to tax and command systems.

More (on wrestling with forestry decisions)>>

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