The taxpayer should not be subsidising industrial dairy

Dairy companies, rather than the taxpayer, should be responsible for a more than half a billion dollar bill for carbon credits to cover ballooning greenhouse emissions coming out of an ever-expanding industrial dairy sector, says the Green Party.

"I congratulate farmers for an increased payout for their milk," Greens Co-Leader Russel Norman says. "And I also congratulate them because, unlike many other sectors of the economy, they have been smart enough to hang on to ownership of their own industry."

However the Government needed to give clear price signals to the dairy and forestry sectors, by making dairy cover the cost of the increase in their emissions and rewarding the forestry sector for absorbing greenhouse gases.

The agriculture sector is projected to produce an excess of 38 million tonnes of greenhouse emissions over 1990 levels during the first Kyoto commitment period of 2008-2012.

"As a country we are required by our commitments under the Kyoto climate protection treaty to purchase carbon credits to cover this surplus in emissions. At a conservative estimate of $20 per tonne of greenhouse emissions, this surplus could cost the taxpayer $760million in 2012 and a big part of this increase is from the massive expansion in industrial dairy."

Treasury has identified a $600m potential liability of taxpayers' money to cover part of this bill which means that the taxpayer rather than dairy industrialists will have to pay the cost of dairy's expanded greenhouse emissions.

"It is wrong to use taxpayers' money to shield the dairy industry from the true cost of their greenhouse emissions, especially when dairy is prospering with record milk sold payouts," Dr Norman says.

"At the same time forestry is receiving no economic benefit from the fact that they are reducing our Kyoto bill by absorbing carbon. The result of this skewed price signal is that there is a massive conversion from forestry to dairy underway across the country, resulting in a decline in carbon absorbed by forests and a massive increase in greenhouse emissions from dairy.

"We need to give clear price signals to the dairy and forestry sectors by making dairy cover the cost of the increase in their emissions and rewarding the forestry sector for absorbing greenhouse gases."