Yet More Great News For the Economy

Carbon tax set to cost dairy farmers $7000 a year in extra energy costs, loss of 8pc income




DAIRY farmers face an average hike in energy costs of $7000 and the loss of up to 7.8 per cent of annual income because of the carbon tax.

In a sombre outlook for Australia's third largest rural industry, the dairy sector has warned the Gillard Government a carbon tax "will impose significant costs" - and likely trigger job losses.

While agriculture is exempt from the plan to curb greenhouse emissions, dairy farmers will be stung with higher electricity and gas costs - causing major concerns across an industry employing around 40,000 people.

The impact of higher energy prices from July next year will be among the highest faced by farmers. The Australian Farm Institute forecasts Victorian dairy farmers will lose up to 7.8 per cent of annual income, while NSW producers face a loss of up to 6.7 per cent.

The AFI estimates energy costs for NSW farmers will be $7691 higher under a carbon tax while Victorian farmers face a hike of $6054 on average.

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In a letter to Climate Change Minister Greg Combet, the Australian Dairy Industry Council calls on the Government to remove the carbon tax on electricity from primary producers and dairy processors.

The Government has been campaigning on the basis that its carbon tax will only hit the top 500 polluters in Australia, but the dairy industry's concerns suggest small business operators will face higher costs.

"We estimate the total cost impact of the carbon tax on dairy farmers will be $5000 to $7000 per year," said ADIC director Adrian Drury in his letter.

"A significant part of this cost reflects the flow-on cost to dairy farmers of the carbon tax impact on food processing, which as you know remains ineligible for (emission intensive trade exposed) support."

Mr Drury, who owns a dairy farm on the NSW coast, said the policy would cost jobs in an industry already facing cost pressures.

Roma Britnell, a farmer from Warrnambool on the Victorian coast, said the carbon tax is "

sending a clear message to farmers that the nation doesn't really care if this sends us to the wall".

A spokeswoman for Mr Combet said dairy processing "has been identified as a sector that uses large amounts of electricity as part of their day-to-day operations".

The Government will help dairy farmers find ways of improving energy efficiency through the Food and Foundries Investment Program.