The Government and farming sector leaders have reached an agreement over climate change, which would see on-farm emissions accounted for by 2025.
In an announcement on Tuesday, farming groups are to work with the Government to implement farm-level pricing of climate change emissions from the sector.
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It comes with the Government's release of a consultation document, informed by the work of the Interim Climate Change Committee (ICCC).
It looks at how to bring agriculture into the emissions trading scheme, a key part of the Government's plan to tackle climate change and reduce New Zealand's emissions.
Agricultural emissions make up nearly half of New Zealand's total emissions profile and are the largest contributor to greenhouse gas emissions in New Zealand.
Agriculture Minister Damien O'Connor said the cooperation and consensus between the farming sector and the Government was an incredibly important shift from farmers and growers on the need to tackle climate change.
"We are now agreed on the outcome; Government and farmers want emissions to be calculated at the farm level where farmers have the most control over how they can manage their own emissions on their property," he said.
"We are now consulting on the options for what we do in the meantime while we build a fair system to price emissions from 2025," said O'Connor.
Minister for Climate Change, James Shaw said it was a significant change.
"The big breakthrough is that, for the first time, the leadership of the main farmers' organisations and farming businesses have reached a level of consensus amongst themselves that emissions pricing is part of the solution for reducing agricultural emissions, as it is for the rest of the economy," he said.
"Of course, there is a significant amount of infrastructure that needs to get laid down across tens of thousands of farms to make that work. Some of that infrastructure still needs to be developed. That's why we need to work closely together over the next few years to make this work," said Shaw.
He said the ICCC had provided its recommendations on how to make the transition work while farming leaders had provided a counter-proposal.
"We're now putting those options before the wider public for consultation so they can both be tested."
Both options aim to see on-farm emissions accounted for and priced by 2025.
The ICCC recommends developing a fund, led by farming leaders, to build the skills and technologies farmers will need to measure and manage their on-farm emissions.
It's estimated that could provide a fund of $47 million a year which would be 100 percent recycled back into fitting out farmers and growers with the measurement tools and know-how to control farm emissions through a processor levy over the next five years, which would eventually lead to farmers handling emissions at the farm-gate by 2025.
Farmers would receive a 95 per cent discount on emissions in line with similar discounts for other industries.
Farming leaders are offering an alternative sector-led proposal, which it would manage, to get the agricultural sector into an emissions pricing system by 2025, funded through the sector's levy organisations, like Federated Farmers, Dairy NZ, and NZ Beef and Lamb.
Shaw said New Zealanders were committed to seeing greenhouse gas emissions reduced to levels that limit the impacts of climate change.
"What we're working through, with proposals like these affecting agricultural emissions, is a range of options, initiatives and supports that can turn that commitment into meaningful action.
"We acknowledge and welcome the farming sector's commitment to engage with the Government to be part of the climate change solution."
It's estimated the average dairy farm, with a 95 per cent discount on emissions, at the current NZ ETS price of $25/tonne would incur $0.01c per kg of milk solids.
The average cost on beef production is estimated at $0.01c per kg of beef, $0.03c per kg of sheep meat, and $0.04c per kg of venison.
Read the full report here