Changes to the emissions trading scheme could hit the pockets of sheep and beef farmers.
Meat and Wool New Zealand estimates that even with a delayed inclusion and changes to the allocation of New Zealand Units (NZU), the cost to an average sheep and beef farmer could rise from $1440 under the original Act to $8200 under last week's changes to the emission trading scheme (ETS).
In its submission to the Finance and Expenditure Select Committee, Meat and Wool New Zealand (MWNZ) said this was because units were allocated based on 90% of 2005 emissions and not 1990, over which period emissions had fallen 14%, or 3.12 million tonnes of carbon, each year.
Over that same period, meat and fibre production has increased 15%, which translated to a 1.4% gain in average emission efficiency.
MWNZ was concerned about the transition period for the sector, saying that allocating units based on 90% of 2005 emissions would leave a shortfall of $20 million a year.
Being liable for 10% of emissions from 2015 would increase the carbon shortfall to $112 million a year for the first three years.
The submission also questioned the wisdom of making the point of allocation the processor rather than the farmer, although the amended legislation stressed that responsibility would eventually shift to the farmer.
The meat industry has also sought to be treated as an emissions intensive industry, saying the changes would add $25 million to $30 million in extra costs a year based on a carbon price of $25 a tonne.
"With the vast majority of its product exported, the meat and wool industries would be required to absorb these new costs, placing further pressure on already sparse returns."
It noted that the only other ETS in operation was Europe, which has exempted food processors.
Its submission suggested the ETS base its emissions intensity test on emissions per value added by an activity, and not emissions per sales price.
"While we acknowledge that a value-added approach to emissions intensity will be more legally complex than the current proposal, we consider it necessary to offset the reduced competitiveness that New Zealand's primary processors will face when they begin to face higher energy costs upon the entry of the stationary energy to the New Zealand ETS."
The board's senior economist, Con Williams, said the ETS was about changing behaviour, and that would be difficult to achieve if 100 processors were to administer the ETS on behalf of 30,000 farmers.