"These forests were already in the ground when the ETS was launched. Since then, the favourable treatment under the ETS of other sectors, relative to forestry, and extreme carbon price volatility have contributed to a net reduction in the planted forest area," Rhodes says. "If things don't change, emissions will gather pace in the 2020s as the spike of forests planted the 1990s are harvested. Fortunately the government recognises this and wants to identify changes to the NZETS that could help increase the rate of forest planting." The discussion document poses a number of questions for public consultation, but rules out including agriculture in the ETS, even though this is the source of 50% of the nation's emissions. Rhodes says it is difficult to fathom how agriculture could be ruled 'out of scope'. It is also contrary to the recommendations of the government's own 2011 independent review of the NZETS, which envisaged agriculture being slowly phased into the scheme. "All investors in land in New Zealand need to be given the same market signals about their role in reducing emissions. This includes those aspects of the ETS that encourage carbon forestry. It is important that land owners – who can be farmers – factor in carbon as an income stream additional to that from the eventual log harvest," he says. Forest owners would also like to see the phase out of subsidies to emitters, particularly given that record low carbon price levels have made this assistance unnecessary over the past few years. Carbon price stability is particularly important to forest owners because of the long-term nature of their crop. "If the ceiling price for carbon is to continue, logic suggests there should also be guidance on what the minimum price will be. All investors will want to know the points at which the government will or will not intervene in the market."
Source Rural News New Zealand
"New Zealand is the only region where milk prices have fallen to extremely low levels, triggering those reductions in supply that we are looking for to rebalance this market. In Europe, the weak euro, the co-operative propping up of milk prices, and the quota systems removal, has meant that supply growth has been stronger there than it ordinarily would be." In the US, production is still growing but only just. The milking herd declined slightly for the second straight month while prices begin to further decline. In the key state of California, production was off by 5.5 per cent compared with October last year. Russia's ban on dairy imports from the rest of Europe had meant a lot of product was finding its way on the secondary markets of Southeast Asia, the Middle East and Africa. This, in turn, meant those regions were sitting on sizeable inventories and were less inclined to step back into the market. But Hunt said the market's problems were cyclical and did not signify structural change. "We believe we have seen a particularly bad cycle that is going to take at least another six months to come out of, but we don't believe we have seen a structural change in the medium term market place." He said that as low prices found their way to the global farm gate the supply growth would be shut off. However, low prices would encourage demand and that in turn would lead to prices moving substantially up. We still expect New Zealand to benefit from rising global trade. New Zealand may be entering a period of slower growth but the growth story is not over. This is still plenty of opportunity over the next five to 10 years. Tim Hunt
"In the medium term, we still believe that economic growth in emerging markets will drive increased demand for dairy and will sustain a much higher trading range than we have seen." In the US, larger scale farming has resulted in lower costs and lower feed costs have driven production higher over the past five years. He said the substantially stronger US dollar is expected to curtail US dairy exports. Dairying in New Zealand still faced a positive outlook. "We still expect New Zealand to benefit from rising global trade. New Zealand may be entering a period of slower growth but the growth story is not over. This is still plenty of opportunity over the next five to 10 years."
source: NZ Herald
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