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Cotton farmers count the cost of the carbon tax

1 July 2011

Australian cotton farming families will still face a 5.5 percent cut to their farm net income following the imposition of a carbon tax, despite the Government’s claim that agriculture will be excluded.

Independent research produced by the Australian Farm Institute for Cotton Australia and the National Farmers’ Federation (NFF), modelled the impact of an economy-wide carbon price tax commencing at $20 per tonne on a typical irrigated cotton farm of 400 hectares.

Modelling under this scenario shows that five years after the introduction of a carbon tax, this farm business would incur total annual cost increases of 2.1 percent, producing a reduction in farm net income of 5.5 percent at year five.

Costs arise from an increase in the price of energy, which would increase the cost of energy-reliant farm inputs, such as electricity, fuel and fertiliser.

NFF President Jock Laurie says this research clearly shows that Aussie farming families will be left well behind in an increasingly competitive global cotton market.

“Quality Australian cotton has always been in high demand around the world, but whacking a carbon tax on top of existing production costs will wipe out our price competitiveness, placing our traditional markets at risk,” Mr Laurie said.

“We’ll continue to do the modelling work that the Government should be doing to expose the folly of rushing into a carbon tax, when none of our international competitors have to carry that same burden.”

Cotton Australia CEO Adam Kay says the Australian cotton industry currently has a tiny carbon footprint, producing less than a third of one percent of the nation’s Green House Gas emissions (GHG).

“Australian Cotton farmers have already put in the hard yards to reduce GHG emissions, adopting our specific Best Management Practices modules, designed to ensure growers use the right emission reducing technology and operational procedures,” Mr Kay said.

“We don’t produce much GHG now, so we don’t have that far to go towards reaching our cotton industry goal of becoming carbon neutral. It’s about time the Government recognised and rewarded our efforts, rather than compromising our international competitiveness with another tax,” Mr Kay said.

The research paper 'The impact of a carbon price on Australian Cotton Businesses' is the third in a series of papers being developed by the Australian Farm Institute, and is available below.

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