Westpac has tougher climate targets for Kiwi farmers than Aussie farmers

Wednesday, 6 November 2024

Federated Farmers has criticised Westpac’s lighter 2030 emissions targets for Australian dairy farmers compared to those it has set for New Zealand dairy farmers.

Westpac has set tougher emissions reduction targets for dairy farmers in New Zealand than it has in Australia, The Post can reveal.

When Westpac New Zealand announced a 10% rise in profit on Monday, it also published details of targets for reducing emissions it financed through its loans.

The targets included reducing the emissions intensity of the dairy farms it finances in Australia and New Zealand by 10% by 2030.

However, they translate into Westpac Australia allowing Australian dairy farmers to continue producing more CO2-equivalent emissions per tonne of milk they produce than New Zealand dairy farmers.

The bank’s 2030 target for Australian dairy farmers is 0.85 tonnes of CO2-equivalent per tonne of “fat protein corrected milk”.

For New Zealand dairy farmers, the 2030 target is 0.75 tonnes.

Federated Farmers banking spokesperson Richard McIntrye said New Zealand dairy farmers would be “incredibly disappointed” to learn Westpac had lighter emissions targets for Australian dairy farmers than it has for dairy farmers on this side of the Tasman Sea.

Farmer activist group Groundswell went further with spokesperson Bryce McKenzie saying: “It looks to me that this is not a level playing field.”

“Surely climate change is world wide not just an individual country thing. If we are going to have targets then what is the point if different countries have different bottom lines?” he said.

In 2023, Westpac estimated the emissions intensity of the New Zealand dairy portfolio it financed was 0.77, lower than the target Westpac has set for the Australian dairy farmers it finances.

For Australian dairy farmers, the 2023 emission intensity estimate for the dairy farms Westpac financed was 0.87, though the bank stressed the data had to be treated with caution.

Westpac has different emissions intensity targets for Australia and New Zealand.

Westpac, which said emissions intensity of dairy farms in both countries had been coming down, has also set a lower 2030 emissions intensity target for Australian beef and sheep farmers than Kiwi beef and sheep farmers.

Westpac issued a statement to The Post, which said: “Our emissions intensity target for the New Zealand dairy sector is based on an emissions pathway from the Science Based Targets Initiative for the Oceania region, similar to the Australian sector target.

“For New Zealand, we undertook additional research into what we believe is practical and achievable for New Zealand farmers based on current practice and technology.”

Richard McIntyre, from Federated Farmers, led the lobbying push to get MPs to investigate bank lending practices as farmer unhappiness with banks rose.

McIntyre said: “Given climate change is a global challenge, not a national one, we’d expect things to be fair across the board, and across the ditch. Instead, banks are making policy decisions that disproportionately target Kiwi farmers.

“This is just another example of banks treating New Zealand’s farmers in an unfair way, which is why Federated Farmers pushed so hard for an inquiry into rural banking competition and practices.”

The banking inquiry, which is being held by Parliament’s Finance and Expenditure select committee, was partly prompted by Federated Farmers, whose surveys showed a rise in farmers feeling they were being put under undue pressure from banks.

It has told MPs that farmers are being charged too much for their loans, and that banks prefer to pour money into unproductive urban housing loans than loans to productive agriculture businesses, including farms.

MPs on the select committee have also set themselves the task of probing the impact of banks’ climate policies on their willingness to lend to farmers, and on whether they charge higher-emitting farmers more for their loans.

McIntrye said 18% of farmers have been asked about their emissions when seeking a loan from a bank, and he said Westpac charged a lower interest rate to farmers who qualified for its “sustainable farm loans”.

Westpac said 43% of its farmer borrower loans were now sustainable farm loans, but also pointed out it has the second highest satisfaction score of any bank among farmers, behind only Rabobank.

Westpac chief executive Catherine McGrath is due to appear on November 20 before the select committee.

However, the banks agri lending book had shrunk by around $200 million in a single year, and its mortgage loan book had increased by around $2 billion.

McIntyre said farmers faced multiple different targets from the organisations they worked with.

“When it comes to emission reductions we’ve got an international target and domestic target, but we’ve also got a target from our dairy company, our meat processor, and our bank,” he said.

New Zealand dairy farmers already produced milk with the lowest carbon footprint in the world, he said.

“That’s largely because our cows are grass fed, but it’s also because our farmers have really good farming practices and great genetics in our herds. Even when compared to other grass-fed farming systems such as the UK, Ireland or Australia, we’re miles ahead,” McIntrye said.

“What that means in practice is that we have fewer levers to pull to get further emission reductions. It’s harder, slower and more expensive to make further improvements.”