Cam Slater: Duh! Of Course It Will Lead To Higher Prices

The economic wizards of the Labour Party have launched their farms emissions scam, where it is their stated goal to start taxing cow and sheep farts, burps and wees, as well as to reduce herds by 16-20%. Apparently, this will have minimal impact on prices and lead to the world food commodities markets wanting to pay a premium for the new virtue signalling farm produce. Of course, the opposite will occur. These changes will only lead to higher prices for the consumer because of the double effect of cost recovery and reduced supply.

New Zealand on Tuesday unveiled plans to tax the greenhouse gas emissions from farm animals, in a controversial proposal designed to tackle climate change.

Prime Minister Jacinda Ardern said the levy would be the first of its kind in the world.

Gases naturally emitted by New Zealand’s 6.2 million cows are among the country’s biggest environmental problems.

The scheme would see farmers pay for gas emissions from their animals, such as methane gas in the farts and burps from cows, and nitrous oxide in the urine of livestock.

Ardern told farmers they should be able to recoup the cost by charging more for climate-friendly products.

She said the “pragmatic proposal” would reduce agricultural emissions while making produce more sustainable by enhancing New Zealand’s “export brand”.

The government hopes to sign off the proposal by next year and the tax could be introduced in just three years’ time.

But with New Zealand going to the polls in the next 15 months, the proposal could cost Ardern rural votes as farmers quickly condemned the plan.

Andrew Hoggard, president of the Federated Farmers lobby group, said the scheme would “rip the guts out of small-town New Zealand”.

Breitbart

The economic geniuses in the Government have shown, yet again, a distinct lack of understanding of how markets work in reality.

Jacinda Ardern has claimed that farmers won’t be worse off because they can pass on increased costs to their customers. You’d think, having been brought up in a provincial town that she’d know that farmers never set prices. They are literally price takers in both supply and demand. They must take whatever price they are given for farming inputs like fertiliser, feed, veterinary supplies etc, and when they sell they are also told at what price they can sell at.

They literally have no control over any of that. They cop it hard on both sides.

Secondly, reducing the herds across New Zealand will lead to a shortage of supply with no corresponding reduction in demand, which even the thickest of people knows leads to increased prices.

Worse still, this targeted reduction in emissions basically means smaller, more expensive herds competing on an open market worldwide where New Zealand produces just 0.14% of the world’s emissions. All the other countries we compete with will be licking their lips in anticipation of windfall profits coming their way as a) our supply reduces which they can fill, and b) our prices skyrocket meaning they can undercut us on world markets. They win both ways, and the farmers get a rogering again.

That is precisely what economists have said as well:

Government proposals to impose charges on agricultural emissions will ultimately cost consumers, economists say.

A consultation document for the scheme which will see farmers paying for agricultural emissions in some form, says it will be introduced in just three years and is expected to be signed off by Cabinet in 2023.

The system of farmgate pricing has been worked on since 2019 after calls from the sector to have a farmgate emissions pricing system that would reward climate-friendly farmers.

Westpac senior agri-economist Nathan Penny said imposing charges on agriculture emissions – particularly for sheep and beef farmers – would end up costing consumers.

“This will mean higher food prices,” Penny said.

“There is no free lunch for this policy – it will mean higher meat and dairy prices.

“Invariably, those costs will end up with household consumers,” he said.

ANZ’s agri-economist Susan Kilsby said the proposals, when enacted, would affect how much food is produced locally.

“It’s definitely going to impact how much food we produced in New Zealand,” she said.

“Dairy and meat production will decrease, but this will provide some opportunity to increase the average value of these goods,” Kilsby said.

“Production of horticultural goods and arable goods is expected to increase, but this will require significant additional investment.”

NZ Herald

So, the functional idiots running the country have decided to impose arbitrary costs on a whole industry, in the middle of a cost-of-living crisis, that will drive prices even higher. While people are struggling to put food on the table, this Government is planning to make that task even harder. This is more of Ardern’s kindness.

At the same time as making food cost more the working class are having their wages robbed by the cancer that is inflation. Again, that is caused wholly by the profligate spending of a Government where there probably isn’t a single minister who can read a balance sheet and understand that the economy is on its knees because of them.

It’s almost like it is a deliberate strategy to beggar our most profitable earners of foreign cash. First, they wrecked the tourism industry, our biggest earner after farming, with debilitating lockdowns. Now they are wrecking the second biggest earner by attacking hard-pressed farmers by chasing an economic folly when we barely contribute anything to emissions compared to our major trading partners who you can be assured won’t be implementing any of this nonsense on their farmers.

In any case, we are world leaders in farming emissions anyway. Instead of hurting the economy further why isn’t the Government insisting that other countries come into line with our emissions? Do you know why they aren’t doing that? Because that is as impossible as trying to put the proverbial poo back in the goose.

This Government is committing irreparable economic damage and is in fact an economic saboteur. They are terrorising our producers, not with bombs, insurrection, riots and Molotov cocktails, but with nasty taxes which are actually far more destructive in the long run.

Cam Slater is a New Zealand-based blogger, best known for his role in Dirty Politics and publishing the Whale Oil Beef Hooked blog, which operated from 2005 until it closed in 2019. This article was first published HERE