NZ businesses dealing with climate change

As well as general political consensus on the need to do more to address climate change issues in New Zealand, there are growing moves by big businesses to do something about it.

This is likely for mixed reasons, including they have a public duty to do something about it, pragmatic business reasons, and doing something to try to reduce the chances of Government forcing them to do more.

Stuff:  Businesses band together to tackle climate change

Sixty firms that contribute almost half of New Zealand’s greenhouse gas emissions are pledging to help the country reach its net zero emissions target by 2050.

The businesses’ chief executives have formed the Climate Leaders Coalition after talks with the Sustainable Business Council. The group includes leaders of Z, Westpac, Ngai Tahu Holdings, Vector, Air New Zealand, Spark and NZ Post.

By signing the CEO Climate Change Statement, each of the business leaders has committed to measuring and reporting their greenhouse gas emissions and working with suppliers to reduce emissions, with the aim of helping to keep global warming within two degrees, as specified in the Paris Agreement.

The businesses will individually set targets to reduce emissions and report on progress annually. Most businesses involved in the coalition are already reporting their targets to reduce emissions.

Voluntary measures may avoid more drastic regulations and taxes and other disincentives.

Z Energy chief executive Mike Bennetts, leading the collective commitment…

…said it would be up to the consumers, media and the general public to hold each business involved in the coalition accountable, for every emission reduction report they puts out.

“When it comes to emissions, customers want to know what the businesses they are shopping at are doing. It will come down to individual customers and their connection with these individual companies,” Bennetts said.

Z Energy has committed to reducing its emissions by 30 per cent by 2020 for its internal operations.

Bennetts said Z Energy sold 9.3 million tonnes of carbon to its customers but was also looking to reduce New Zealanders’ reliance on fossil fuels.

Tricky for a petrol pump company.

Fonterra global operations chief operation officer Robert Spurway…

…said the company had also pledged to 30 per cent reduction, but by 2030 from a 2015 baseline.

“At the moment there is no legal requirement for businesses to complete emission reporting. The Government is looking at this over time, as part of New Zealand’s commitment to climate change, but this accelerates that,” Spurway said.

“It gives businesses that opportunity to lead through commitment by all those businesses within the coalition to report on an annual basis. It’s a step in the right direction.”

Professor James Renwick, of the Victoria University school of geography, environment and earth sciences…

… said it was good news for climate change action in New Zealand.

“This coalition, comprising almost half of the country’s greenhouse gas emissions and including some very prominent businesses such as Fonterra and Air New Zealand, has the potential to make a significant difference. We will have to wait and see what actions the members of the CLC actually take, but the stated aim of reducing emissions to meet Paris Agreement limits is excellent”.

Professor Tim Naish, a climate scientist at the Antarctic Research Centre…

…said it was significant that the aviation, dairy and petroleum sectors were signatories.

“But just as it applies to governments that pledged in Paris, good intentions must translate into action, and time is short.”

“The science shows us that collectively if we leave it much longer this will require negative emissions and a technological solution.”

It is likely to become a mix of voluntary, incentive based and regulatory changes.

Whatever happens it is widely acknowledged there is a growing need to do something about climate change, and increasing efforts to do something from both Government and the business sector.

Q+A: the city/rural divide

Fonterra have been doing a lot of advertising on television lately – are they trying to win over public opinion? Or is it too late?

On demand:

WTO agreement to eliminate agricultural export subsidies

A World Trade Organisation conference in Kenya has agreed to eliminate the ability of WTO members to subsidise their agricultural exports.

This will benefit New Zealand as we are one of the few major agriculture traders who don’t use subsidies.

NZ Herald reports in Export deal will boost dairy prices, Fonterra says.

Fonterra chairman John Wilson said the historic breakthrough would be good news for dairy farmers.

“For years the use – or even the threat – of export subsidies have resulted in world dairy prices below their true level, reducing returns to dairy farmers,” Wilson said.

It should also help with our meat, wool and other agricultural exports.

A World Trade Organisation ministerial conference held in Kenya and attended by New Zealand Trade Minister Todd McClay has agreed on the WTO Nairobi package, which will eliminate the ability of WTO members to subsidise their agricultural exports.

That is an outcome successive New Zealand governments have sought for decades, with trade envoys identifying agricultural subsidies, along with tariffs, as one of the biggest obstacles to free trade.

McClay said it had been illegal to subsidise the exports of industrial goods for more than half a century, and it was a major achievement to have that extended to agriculture.

“This outcome directly benefits New Zealand agricultural exporters who have to compete in some markets with subsidised goods.”

New Zealand has led the way in free trade and has become competitive in an uneven playing field. As the rest of the world moves in the same direction our trade will benefit more.

A survey by the Worldwatch Institute last year showed New Zealand’s largely subsidy-free status was not the norm – and that the top 21 food-producing countries paid out an estimated US$486 billion ($722 billion) in farming subsidies in 2012.

China paid US$165 billion in 2012, mostly to support rice and wheat farmers, with Japan paying US$65 billion, the European Union more than US$100 billion and the United States $30 billion.

That’s huge subsidies that will have distorted pricing.

Federated Farmers National President William Rolleston said it was a positive and potentially significant deal. “Given the scale and significance of New Zealand’s agricultural export earnings, the removal of any instrument that can distort market forces and disadvantage our exporters is an important step forward,” he said.

“Achievements at a WTO level also remove the need to develop bilateral solutions with individual trading partners, so we hope there are more deals of this nature to come from the WTO.”

The deal completed a year of important international wins in what have been difficult market conditions for much of New Zealand’s farming sector, he said.

Agricultural production and markets will always have ups and downs, but this should reduce the impact of the downs and boost the returns from the ups.

Dairy prices up 14.8%

Just one rise after five months of falls but the latest dairy auction gives a little hope that the steep decline may have bottomed out. 14.8% is a significant turnaround.

Radio NZ reports Dairy price rise after months of losses:

Dairy prices have risen an average 14.8 percent in the fortnightly GlobalDairyTrade auction overnight, ending a five-month run of losses.

It is the first rise in the dairy price index since March.

The benchmark whole milk powder price has risen by 19.1 percent, to $US1856 ($NZ2820.68) a tonne.

The overall average price for dairy commodities has come in at $US1974 a tonne.

The amount of product put up for auction dropped by 9623 metric tonnes offered at the previous auction a fortnight ago to 36,904 metric tonnes.

That gives the dairy industry and the New Zealand economy some hope after a run of bad news.

At least it has temporarily stemmed a depressing decline.

DairyAuctionTrendAug2015

DairyAuction10YrTrendAug2015

Source: GlobalDairyTrade

Dairy prices continue to fall

The latest auction has resulted in another large drop in milk dairy prices. The continued slide will put a lot of financial  pressure on many dairy farmers, and on the whole New Zealand economy.

NZ Herald reports in Dairy prices plunge 10.7 per cent at latest auction:

Dairy prices fell sharply at the latest GlobalDairyTrade auction, the GDT price index dropping by 10.7 per cent from the last sale a fortnight ago and with wholemilk powder prices leading the way.

The price of whole milk powder – which is responsible for about 75 per cent of Fonterra’s farmgate milk price – fell by 13.1 per cent to US$1,848 a tonne.

Price declines were across all but one of the products offered for sale.

Fonterra’s current milk price forecast of $5.25 per kg of milksolids for 2015/16 is based on GDT prices reaching about US$3500 a tonne towards the end of this season.

That looks a long way off.

Prices, after a steep decline in 2014, bounced back in February this year but have been falling ever since.

Oversupply, slack demand from the world’s biggest dairy importer – China – Russia’s import ban, the removal of dairy production quotas in Europe and higher production arising from cheaper feed costs have all acted to depress dairy prices.

The latest auction summary from GlobalDairyTrade:

GlobalDairyTrade15-07-15

The ten year price index doesn’t look flash either with current prices heading to a decade low.

GlobalDairyTrade10yrto1015

Labour: poor performance warrants halving salaries

Bad and good reasons for a salary reconsideration.

A Labour MP thinks that poor performance warrants cutting salaries in half. NZ Herald reports:

“The events of the last week have shaken the farming sector’s confidence in Fonterra, and the chief executive must take responsibility,” Labour’s Primary Industries spokesperson Damien O’Connor said in a statement.

“Theo Spierings should lead by example and voluntarily reduce his pay by half,” he said.

The events of the last seven years have shaken the political sector’s confidence in Labour.

Should O’Connor take responsibility and voluntarily reduce his pay by half? And Andrew Little and the rest of the Labour MPs?

Fonterra’s problems are largely due to global milk prices, which are affected by global demand for milk and global production of milk. Spierings is nowhere near fully responsible for milk throughout the world.

Labour MPs are a primary cause of Labour’s problems.

Another primary cause is a lack of party finances. Perhaps O’Connor will give half his salary to the party. Then he could ask his colleagues to follow his example.

UPDATE: Chris Trotter has already thought of something similar:

Well, here’s an idea (hat-tip to Danyl McLauchlan). Why not make it a rule that a MP cannot take home more than the average wage of, roughly, $55,000 per year. The balance of their income, $95,000, would go to the party. This would guarantee an annual income, from its current 32-strong caucus, of at least $3,040,000 per year, or, $9,120,000 over the three year parliamentary term.

UPDATE2: Matt Long comments on this at Kiwiblog:

Apart from world dairy prices falling Fonterra “forgot” to apply for access to the US market, alienated their shareholders, created a massive needless food scare and is seriously annoying staff with bureaucratic nonsense. We used to be very proud of the NZ Dairy Board, does anyone feel like that about Fonterra? Theo needs to step up or move on.

If that is at all accurate there’s valid reasons why Spierings’ salary and position could be questioned.

Shearer sensible, responsible on Fonterra crisis

David Shearer in Parliament yesterday with a Ministerial Statement on the dairy industry:

DAVID SHEARER (Leader of the Opposition): Our priority today and over the next few days is making sure that parents here and abroad have the accurate information they need to ensure that their children are safe. As a parent I understand how anxious they might be feeling. They are confused and worried about whether there is a risk to the health of their kids. Their questions must be answered in full. They must have access to accurate and timely advice, and nothing must be held back from them. The safety of our children and children abroad is paramount.

We are standing alongside the Government as it works with Fonterra to provide answers for parents.

We will also support its efforts to protect our export markets and the international reputation that we have from further damage. When the time is right we will also be demanding answers, as many New Zealanders will be.

This issue is bigger than politics, but Fonterra is not bigger than Parliament. It is up to us in this House to come together and make sure that everything that happens from this moment on happens in the best interests of parents and of our country.

One of the best responses or speeches I’ve heard from Shearer, sensible, responsible.

Full draft transcript from Shearer and also from John Key, Russel Norman and Winston Peters here.
Videos of speeches: