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Processors may have to pass carbon tax costs on to farmers

4 August 2011

A Senate Inquiry hearing into the carbon tax in Tamworth has heard that beef processors may have to pass the costs of the carbon tax on to producers; exactly as the National Farmers’ Federation (NFF) predicted.

NFF President Jock Laurie says the processor’s commitment to potentially passing the costs back to farmers during yesterday’s hearing confirms the NFF’s consistent concern that Australian producers will wear the cost of the carbon tax.

“We have repeatedly said that the carbon tax will cost Australian farmers, and yesterday’s comments did nothing to alleviate our concerns. If anything, it heightened our fears,” Mr Laurie said.

“There has been some discussion that agriculture will not wear the costs of the carbon tax and that any costs endured by the food processing sector will be passed to consumers, not farmers.

“But the processor said yesterday that such businesses are facing millions of dollars in higher costs, particularly through increased electricity prices, and the only way they can recoup this cost is to pass it on to their customers – our farmers.

“And this one processor from northern NSW is not alone: the processing sector has repeatedly said that they may have no choice but to pass the extra costs back to producers,” Mr Laurie said.

The figures, compiled by independent researchers Australian Farm Institute, show that farmers across the country will face additional costs under the $23 per tonne carbon tax – from $1,000 for an average Australian sheep farm to $10,500 to an average Australian cotton farm.

“Even with agricultural emissions and fuel excluded, the farming sector is still set to be whacked with substantial costs under the carbon tax, making us less productive and less competitive,” Mr Laurie said.

“Any suggestion that farmers will not have to wear the costs of this tax is simply incorrect. Our farmers are the end of the food chain, and as a result, will be footing the bill,” Mr Laurie said.

A summary of the Australian Farm Institute research reports, along with the full reports for the grains, sheep, cotton, beef and rice sectors, are available below.

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