Isra-Mart srl: Labour claims victory in ETS row

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Isra-Mart news:

Labour is claiming victory in a row with the Government over whether making farmers pay for their greenhouse gas emissions will drive up the cost of dairy products.

Labour wants to bring agriculture into the Emissions Trading Scheme in 2013, two years earlier than currently planned, to fund a rehash of its research and development tax credit.

However, Prime Minister John Key has said the Government would not bring the sector into the scheme unless other countries had followed suit.

Key said Labour's plans would push up the cost of dairy products, but Labour rejected that, saying dairy prices are set by international markets.

The Ministry of Agriculture and Forestry and the Economic Development Ministry today appeared before Parliament's commerce select committee.

MAF's director of sector performance policy Ian Cossar found himself in the middle of the argument.

He told the committee there is a ''strong correlation'' between domestic milk prices and international commodity prices for milk derivative products.

Labour's economic development spokesman David Parker asked if that meant milk prices wouldn't change if agriculture came under the ETS.

Mr Cossar diplomatically replied he couldn't answer that without doing calculations.

The milk price wasn't ''absolutely fixed'' by the international market, he said.

Following questions from National MP Sam Lotu-Iiga, Mr Cossar said there were domestic factors in any market and ''a million'' variables went into retail prices.

Mr Parker said MAF's comments show National's assertions were ''plainly wrong''.

''While there are variations in costs and margins charged by the retailer in New Zealand, the underlying price paid to farmers reflects the international price.''

Until Labour released its policy to bring agriculture into the ETS early, the Government had repeatedly claimed it couldn't do anything about high milk and cheese prices, he said.

''It then switched to claiming that asking farmers to pay for their agricultural emissions would increase prices in New Zealand.

''(This) highlights that Labour's policy requiring farmers to pay for about 10 per cent of their agricultural greenhouse gas emissions will not put up New Zealand dairy prices.''