Westpac NZ and Lincoln University have released research that finds agile farm management will be critical in reducing emissions and adapting to climate change.
Authored by Lincoln University’s Agribusiness and Economics Research Unit on behalf of Westpac, The Westpac NZ Agribusiness Climate Change Report assesses the risks and opportunities presented by climate change, as well as the sector’s vulnerabilities and potential responses.
Westpac NZ Head of Agribusiness Tim Henshaw says the report and a series of factsheets were designed to provide Westpac customers and other farmers and growers with impartial information about the way climate change may affect their location and type of production, and how they can respond.
“Importantly, the report finds there is already a range of existing management options available to assist farmers in strengthening the physical resilience of their farming systems and meeting New Zealand’s 2030 agriculture climate targets, with only a few requiring an initial investment of capital.
“However, applying these options more widely will require uptake of best practice farm management. This may require a significant uplift in skills and training to ensure a greater number of farmers have sufficient expertise to both reduce emissions and adapt to climate change.
“Therefore upskilling at an individual level, and lifting capability across the wider sector, will be critical.”
Mr Henshaw says the report makes information relevant to farmers and growers by exploring credible case studies.
“For example, it looks at the effect of drought on a dairy farmer in Canterbury, and the impact of warming winters on kiwifruit growers in the Bay of Plenty.”
He says the optimal response to climate change will be different for every producer.
“There is no single off-the-shelf solution. I’d encourage primary producers to think about how the climate is changing in their part of the country, and what effect that will have on production. They also need to consider what expertise they have available to adapt their operations, and plan to fill that gap if it exists.”
Mr Henshaw says the report also explores the opportunities that may arise for producers that adapt quickly.
“In some cases land may become suitable for different types of production that were not previously viable.
“Other commercial opportunities may arise if individual producers or the wider New Zealand industry take a leadership position on tackling transition risks like changing consumer preferences and trade challenges.
“In another finding, the report also assesses the way de-stocking combined with improved productivity can help both reduce emissions and maintain profitability.
“Many initiatives should be regarded as ‘win-win’ as they will have side benefits such as improving soil health or biodiversity.”
Lead author of the report, Lincoln University Professor Anita Wreford, says adaptation will be crucial, but has its limitations.
“There are very useful actions farmers should consider in the short and medium terms.
“However, if temperatures rise significantly there will come a time at which current adaptations are no longer effective. That’s one of the many reasons it’s critical every effort is made to avoid as much warming as possible.”
She says there is scope for further research into the enduring effectiveness of adaptation practices under a changing climate.
“Because astute land management will be critical in responding to climate change, there is also a need to increase training of rural professionals to support farmers and growers.”
The report was produced as part of a wider body of work undertaken by Lincoln University for Westpac NZ looking at the impact of climate change on agriculture in New Zealand.
Mr Henshaw says Westpac can play a key role as a lender in helping farmers and growers prepare for a warmer future.
“Earlier this year we launched a pilot of our new Sustainable Agribusiness Loans with a small group of farming customers.
“The loan is the first of its kind to require a customer to meet all parts of the Sustainable Agriculture Finance Initiative guidance. This guidance includes practices to reduce emissions, improve long-term resilience and deliver more sustainable outcomes in terms of water, waste, pollution and ecosystems.”
Once farmers commit to meet the guidance, they have two years to achieve that goal and will be supported with discounted loan pricing.
Westpac plans to make the loan available to its agri customers in 2023.
Report key findings
- The majority of adaptations identified in the report are based on changes to the management of the system, with only a few requiring an initial investment of capital. However, the management changes may require significant increases in labour and skills, so a key feature of supporting farmers to adapt to climate change will be in extension work and knowledge exchange.
- A range of opportunities also arise from the transition to low carbon agriculture in New Zealand. These include reduced on farm production costs, increased productivity through climate smart farming techniques such as precision agriculture and increased farm profitability through diversification of farming systems.
- Increased heat stress and the likely increases in extremes such as drought, mean some regions are likely to experience challenges to their systems during the next 30 years.
- Pastoral farming systems across New Zealand are likely to experience increased pasture growth, however pests and disease may also worsen; farmers and growers may also be less able to rely on irrigation to cope with water variability and drought.
- Climate change may make some farms unprofitable in drought years, for example the report shows two consecutive years of drought on sheep and beef farms could result in profit decreases of 46-65%.
- A range of greenhouse gas mitigation options are already available to producers, including feed, pasture, stock and effluent management for pastoral producers, as well as crop and soil management and technology investment for all sectors.
- These types of changes can all get close to, or achieve, New Zealand’s 2030 methane reduction target of ten per cent below 2017 levels.
- However, achieving reductions above that will require a combination of improved technologies and land use change.
- Improving farm management practices is critical for avoiding profit loss, both for physical as well as for transition risks.
- This is a key area for further investment, both in research and in the training of rural professionals and supporting extension programmes for farmers and growers.
The Agribusiness and Economics Research Unit (AERU) operates at Lincoln University, providing research expertise for a wide range of international, national, and local organisations. AERU research focuses on business, resource, and environmental issues. https://www.aeru.co.nz/.