Even though agriculture is unlikely to be covered by the proposed emissions trading scheme (ETS), the National Farmers' Federation says the Federal Government must take steps to ensure consumers can still afford basic food items as substantial price hikes become the norm.
NFF presidend David Crombie says an ETS "will cause pain" to both businesses and households, but it could be crippling for Australia's primary industries.
"People are slowly coming to grips with that reality," Mr Crombie said.
"But it could be crippling for Australia's food production, threatening to damage our national self-sufficient food supply and slashing at our international competitiveness if we get it wrong.
"We need assurances and tangible recognition that our farmers' competitiveness – both exporters and those exposed to cheaper imports – will not be sacrificed at an ETS altar.
"As Ross Garnaut and the Productivity Commission have both highlighted, even while it is impractical for agriculture to be covered by an ETS, the farm sector will bear the brunt of massive price hikes to up to half of its cost base."
The NFF cites Australian Bureau of Agriculture and Resource Economics data showing that for sectors like cropping, 45pc of their input costs are energy dependent – including fuel, electricity and other energy-dependent costs, such as freight, fertilizers and crop contracting.
"All of these costs will rise dramatically under an ETS," Mr Crombie said.
"Assuming those costs are passed on, as is the intention, Australians will pay a premium for essential foods.
"Meanwhile, our $30 billion-a-year agricultural export market will struggle to maintain customers – a disturbing and ironic twist, in that, our trade partners will source cheaper food from countries with polluting farm systems and who do not have an ETS or its cost pressures.
"Our Government, in designing an ETS, must take account of Australia's low-emission and environmentally-sustainable farm production to ensure it is not traded-off as a perverse and out-of-kilter response."
Mr Crombie says the massive cost increases to the farm sector need to off-set with incentives to further reduce carbon emissions.
"As New Zealand's ETS analysis has shown – a 160pc cut to farm margins – the impacts for agriculture are dire," he said.
"Now that the Kiwis are backing away from agriculture's coverage under an ETS, we must ensure we don't make the same mistakes."
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