I can hear the noise as I write this headline; you’re barking mad there’s no way that can happen!
But in fact it can and I will set out my reasons for claiming this to be the case, but I need to set out some facts that have a huge bearing on this happening.
How can it happen?
Implement PC1!
Why would it happen?
The economic effects as a result of the implementation of PC1!
Background:
PC1 is the proposed change to be made to the operative Waikato Regional Plan that was put forward by the Waikato Regional Council back in 2016 as a result of the then Chairperson Paula Southgate using her casting vote to support the plan change.
As a result of the proposals in PC1 there will be farmers that will have to leave the industry as they will not be able to make a living carrying on farming under the new requirements.
Local Government NZ released a report in approximately 2016 which stated that the Waikato region would lose 68% of dry stock farms and 13% of dairy farms as a result of the new rules in PC1. The claim was made that there was no problem m as those farms could become commercial forestry operations (yeah right).
I don’t know how a farmer is going to afford to transfer to forestry when they will have to find a huge sum of money to develop their property into a commercial forest and then survive for a minimum of twenty five years before they get a return on their investment when the trees are ready for harvest.
Under PC1 rules once the property is downgraded to forestry use then it can never be returned to higher intensity farming as it was prior, therefore the land value will plummet.
It is expected PC1 will be operative next year and, depending on the final results of the Environment Court hearing, that farmers might need to get resource consent and or develop a farm environment plan to allow for continued operation of their farms.
PC1 is likely to significantly change how farmers can operate regardless of whether they are arable, dairy, drystock or horticulture.
It is believed that a certified farm environment plan which meets the requirements of PC1 will be needed for all farms and such plans will require farmers to change some practices and/or adopt new mitigations to reduce diffuse discharges of nitrogen, phosphorus, sediment and E coli. Irrespective of the fact that farmers, growers etc are currently well on track to limit adverse effects from utilising the farming areas for food production.
Farmers will need to comply with minimum standards for stock exclusion (from permanent and intermittent drains and streams), fertiliser application, cultivation, races/culverts/gates etc.
There is huge concern that many of these standards or timeframes are currently not practical or implementable whilst still maintaining economic viability of the farming operation yet they will be legally enforceable.
Irrespective of whether farming operations are a permitted or consented activity, they will be subject to ongoing scrutiny as council monitors compliance with permitted activity rules and consents, and will need to budget for ongoing costs to implement mitigations as part of any requirements in their farm environment plan or resource consent.
We need to ensure that PC1 is practicable, workable and fit for purpose so we ensure the economic stability of our country and protect the security of our food supply.
In the original proposal the Waikato Regional Council stated that PC1 was the bold first step in an 80-year journey to improve the water quality of the Waikato and Waipa Rivers so they are safe for food gathering along their entire length and meet the requirements of Te Ture Whaimana o Te Awa o Waikato, the Vision and Strategy for the Waikato River.
Based on the information that was currently available, the Combined Stakeholders Group concluded full achievement of the Vision and Strategy by 2096 was likely to be costly and difficult. The 80-year timeframe recognised the ‘innovation gap’ that means full achievement of water quality requires technologies or practices that are not yet available or economically feasible.
The V&S clearly states that any plan to improve water quality in the Waikato and Waipa Rivers, must include the social, economic and cultural impacts that plan will have on the region if that plan is implemented.
The V&S has an aspiration to get water quality in those two rivers to historical standards yet at the same time the V&S realizes there must be a compromise and that’s where the social and economic clause fits in.
PC1 has not adequately considered the social and economic effects on the region if the plan was implemented.
From the council figures, we know that 39per cent of Nitrogen and 55 per cent of Phosphorus comes from other sources than farming. The facts are that, yes, farming is a contributor, but it is not alone, yet PC1 focuses solely on farming as the source of contaminants in the waterways and yet this is provably wrong.
7 per cent of the N and 18 per cent of the P comes from point sources and the balance (32 per cent N and 37 per cent P) is from natural sources.
Arguably the largest contributor to sediment loading in the rivers is ignored in this plan change – KOI CARP! When they feed they stir up the bottom of ponds, lakes and rivers, muddying the water and destroying native plant and fish habitat. Koi carp are opportunistic omnivores, which means they eat a wide range of food, including insects, fish eggs, juvenile fish of other species and a diverse range of plants and other organic matter.
They feed like a vacuum cleaner, sucking up everything and blowing out what isn’t wanted. Aquatic plants are dislodged in the process and are unlikely to re-establish. Koi carp cause habitat loss for plants, native fish, invertebrates and waterfowl.
Total Negative Impact in Waikato region will be billions of dollars with the PC1 documents quoting figures of $500 to $600 million dollars per year for the eighty year time frame of the proposed plan change implementation.
It must be remembered that these figures are from 2016 when PC1 was first proposed and they will be seriously increased given the level of inflation over the past nine years.
Overall it is expected to cost the dairy and drystock industries alone, losses of approximately $2.4 Billion dollars.
This total negative economic impact on the Waikato region comes about even though only 15 of the sub-catchments in the Waikato and Waipa catchments were exceeding the standards proposed to be introduced through the enactment of PC1 at the time it was proposed.
In other words there was going to be significant costs across the Waikato region with flow on effects across the country as a whole, for very little gain.
The impact on the horticulture sector is such that under the rule changes that came into effect in October 2016 when the PC1 was advertised for public submissions, the horticulture sector will over time disappear from the Waikato region.
There are many other downstream effects from PC1 which need to be taken into account such as;
If the claims of the decline of small rural towns and consequently the increased growth of the main centres are correct, and exacerbated as expected under the enactment of PC1, then pollution from these other sources (e.g. storm water and effluent discharge from urban areas) are only going to grow as a percentage of the total discharges.
Economic reasons it will happen:
Context on Waikato's dairy sector
For the 2024/2025 season, the total value of the dairy payout for the Waikato Region is estimated to be approximately $4.8 billion.
Other notable statistics about the dairy industry in the Waikato include:
Waikato has about 4200 dairy farms, the most in the country and a 13% reduction in dairy farms means a loss of approximately 546 farms.
The cost to the region in lost GDP from a reduction of 13% in dairying is approximately $3.18 billion with an approximate cost of 2,700 jobs in the industry.
The Waikato region is a major beef-producing area with significant red meat production, with 51% of the Waikato foodshed's land used for red meat production. While Canterbury has the most beef cattle, Waikato has the most beef-producing farms in New Zealand much of which is exported.
While there is variation in the type of livestock run on a sheep and beef farm, most farms are centred around sheep and cattle. Beef + Lamb NZ reported that approximately 1.2 million tonnes of sheep and beef carcass were produced in 2018. 71% of that was exported overseas.
Key points about Waikato's beef production:
For the 2024 calendar year, the total value of beef exports from the wider Waikato region was $1,176.6 million, as part of the total meat and meat product manufacturing exports and given the predicted 68% loss in drystock farms there is likely to be a reduction in this export value of approximately $799,680,000, coupled with a reduction in the number of farms by approximately 1,655 farms.
Summary:
Treasury’s latest fiscal projections show deficits stretching indefinitely into the future. The government is borrowing just to pay the bills.
The cause of our recession is largely inflation fuelled by $50 billion of money printing, and a reckless borrow-and-spend binge under the previous Labour government.
Treasury has warned that expenditure and debt must both be reduced to restore our financial sustainability.
Unless spending growth is restrained and debt begins to fall, we are headed for permanently higher interest costs and a reduced capacity to fund essential services.
Treasury’s long-term fiscal statements show that an ageing population and rising health and superannuation costs will drive debt above 50 per cent of GDP within a generation unless policy changes.
Given the current situation with our heavy debt loading and the need to either cut spending or increase our income, any serious reduction in our ability to export agricultural products has huge potential to cause us to slide further into recession.
The Ministry for Primary Industries reports that for the year ending June 2023, agriculture generated $48.9 billion in export revenue, representing 70% of New Zealand's goods exports, which were $74 billion.
The Government has stated that they want to double our primary exports to allow the income to bolster our financial position yet with the resulting effects of implementation of PC1 we will be looking at a reduction not an increase and given that this is likely to become the benchmark for all regional authorities across the country over time, it is quite likely that the outcome from PC1 may be Bankruptcy for NZ.
.svg){kind=logo}
By Andy Loader, Poke the Bear