Labour’s ETS change could cost farmers $200/steer

Brendan Moyle does some ballpark sums on Labour bringing agriculture unto the ETS:

Some back-of-the-envelope calculations show putting agriculture into the ETS isn’t straightforward. Supposing the price of carbon is say, $16 per tonne, and 1 kg of beef protein takes the FAO average (see below) of 342kg of CO2 emissions.  If a beef cattle yields 200-250 kg of meat (about 1/6th of which is protein), then that’s about 40kg of protein. That’s associated with about 13-14 tonnes of CO2. So that’s an additional cost of about $200 per beef steer. Any way you play with these numbers, the cost of sheep, beef and dairy farming in NZ is going to rise dramatically.

So there are 3.5 million beef cattle in NZ. That’s a $700 million extra cost just on those farms.

The average export price for beef per head is almost $1,200 so that $200 extra charge is one sixth of the income. So if the current profit margin was less than one sixth, those farms are now making a loss. This is not a minor policy impact – it is huge.