Sector in dark about cost of tax

The agricultural sector is still counting the true cost of the Federal Government’s carbon tax.

The policy remains scarce on detail, but almost all sectors of the industry agree — the cost of producing food and fibre will increase.

Despite agriculture’s exemption, farmers fear underlying costs and reduced competitiveness could devastate the industry, which is already under pressure due to shrinking gross margins.

Victorian Farmers Federation (VFF) president Andrew Broad said that ultimately the tax would reduce the ability of Australian farmers to compete globally.

“Independent research by the Australian Farm Institute (AFI) has shown the average farmer will still incur an additional $1500 a year in costs under a carbon price of $23 per tonne, ” he said.

“In Victoria, we are especially concerned with the impact of the tax on the dairy industry where research indicates a possible hit of $6000 per farm.”

The scheme provides for more than $400 million to be spent on agricultural carbon mitigation research and development, but the National Farmers Federation (NFF) still warns net farm incomes will be eroded by 2.4 per cent.

The AFI has also estimated six to eight meat processing facilities could be included in the 500 companies which will be directly affected by the tax.

Despite the Government’s concessions to agriculture, the NFF remains opposed to the tax — as do WA farm groups.

The Pastoralists and Graziers Association labelled the carbon tax as “destructive”, while WAFarmers climate change spokesman Dale Park said his biggest concern was the tax’s affect on heavy haulage.

He said a major concern for farmers was that the tax exemption for heavy vehicle fuel was to be removed in two years.

“Diesel for agricultural haulage is going to be exempt for the first two years, but after that it won’t be, so we will need to look further into the impact of that on country people, ” he said.

Once the exemption for haulage is lifted, heavy vehicle users will face a $510 million a year hit from 2014.

“It is unfair on country people because everything gets transported via diesel trucks, ” Mr Park said. “Until we have an alternative all it is doing is putting prices up.”

WAFarmers president Mike Norton said farmers needed financial support to reduce their carbon footprint.

“The final legislation is more than six months away and with the details still to be negotiated, nobody can be exactly sure how much extra farmers will have to pay, ” Mr Norton said.

“What we do know is that farmers have no capacity to pass on any additional costs to consumers unlike most other industries, which means these costs must be absorbed by the farmer’s business.”

Carbon tax at a glance

•Carbon price to come into effect on July 1, 2012, starting at $23 a tonne, rising at 2.5 per cent a year. It will be paid by about 500 of the biggest polluters.

•The tax will be replaced by an emissions trading scheme on July 1, 2015.

•There will be two rounds of tax cuts and increases in allowances, payments and benefits.

•Taxpayers with income below $80,000 to get a tax cut from July 1, 2012.

•Agriculture is not subject to carbon price and farmers to benefit from carbon farming.

•Climate Change Authority to advise on pollution caps and meeting emissions targets.

•Most exposed industries, such as steel, aluminium, zinc, pulp and paper makers, will get free permits representing 94.5 per cent of industry average carbon costs. $300 million has been set aside to help the steel industry move to a clean energy future.

•A $10 billion Clean Energy Finance Corporation will be established to invest in new technology.