Point of Order: Impeding food production with taxes on emissions is a bad idea when the world is tipping towards mass hunger

As the war in the Ukraine drags on, the international food crisis is deepening. The Economist put it simply but grimly:

“The war is tipping a fragile world towards mass hunger. Fixing that is everyone’s business”.

So shouldn’t the New Zealand Government be exhorting farmers to go all out to produce as much as they can for this country to be lifting its food exports? Is this the time for the government to be erecting new hurdles to impede the production of food? Shouldn’t it delay the plan to tax methane emissions for at least 12 months?

Let’s look at what The Economist further said:

“The war is battering a global food system weakened by Covid-19, climate change, and an energy shock. Ukraine’s exports of grain and oilseeds have mostly stopped and Russia’s are threatened.

“Together, the two countries supply 12% of traded calories. Wheat prices, up 53% since the start of the year, jumped a further 6% on May 16th, after India said it would suspend exports because of an alarming heatwave.

“The widely accepted idea of a cost-of-living crisis does not begin to capture the gravity of what may lie ahead. António Guterres, the UN Secretary General, warned on May 18th that the coming months threaten ‘the spectre of a global food shortage’. The high cost staple foods has already raised the number of people who cannot be sure of getting enough to eat by 440m, to 1.6bn.

“Nearly 250m are on the brink of famine. If, as is likely, the war drags on and supplies from Russia and Ukraine are limited, hundreds of millions more people could fall into poverty. Political unrest will spread, children will be stunted and people will starve.”

ANZ Bank economist Susan Kilsby, in her recent edition of the bank’s Agri-focus, said global food prices continue to strengthen as shortages loom for basic foods such as grains.

“This means there will also be a shortage of carbohydrates to feed livestock. This won’t directly impact New Zealand food production systems, but it will impact our competitors who rely on grain to produce beef and milk. At the same time, the price of growing pasture has also gone up, as global fertiliser costs have soared.”

The shortages of those basic feed stocks would underpin global production costs and keep production in check, but it would also erode the ability of poorer countries to import the higher-value foods that New Zealand exports, Kilbsy said.

The recent lockdowns in China had disrupted supply chains and impacted demand for some of the food products we export to China.

They also were having a significant impact on the economies of many other Asian nations.

“China plans to increase fiscal spending to offset some of the impacts of the lockdowns, but the direct impact of the disruptions to supply chains will be felt even harder in many other Asian nations.

“The quantity of New Zealand’s meat, dairy and horticultural goods available for export globally has been impacted by either detrimental weather or labour shortages.”

Kilsby noted that He Waka Eke Noa has delivered its recommendations for pricing agricultural emissions and the Government is expected to formally adopt these recommendations in December.

“Methane emissions pricing is expected to have a larger impact on deer, sheep and beef farms than dairy farms.”

Point of Order notes that the government has been silent on these issues (admittedly Agricultural Minister Damien O’Connor has been on missions abroad).

But surely this is time for it to take the lead in striving to expand the country’s food production and exports to feed a world which The Economist says is headed for mass hunger.

Point of Order is a blog focused on politics and the economy run by veteran newspaper reporters Bob Edlin and Ian Templeton