Claims the emissions trading scheme (ETS) will rip the heart out of agriculture are supported by figures supplied by a Meat and Wool New Zealand economist.
Meat and Wool New Zealand economist Con Williams said, depending on the cost of carbon, the initial extra cost would slash already slim farm profits by between 42% and 84%.
Ironically, the hardest-hit sector would be the least intensively farmed land, the South Island high country which, between 2013 and 2018, would be liable for 475 tonnes of carbon dioxide (CO2) equivalent, adding between 4% and 7% to farm working expenses, depending on the cost of carbon, and bringing into question the sector's viability.
Mr Williams said 85% of those greenhouse gas emissions came from fertiliser and livestock, but the proportion of their liability was related to the size of business.
Under the ETS, industries that emit greenhouse gas have to buy one tradeable New Zealand unit (NZU - equivalent to one tonne of CO2 emitted) which can be bought from those who reduce their emissions or sequester carbon.
From 2013 to 2018, the agriculture sector will be allocated NZUs equivalent to 90% of 2005 emissions, but this allocation would be progressively phased out from 2018.
Environmental groups, including the Green Party, say agriculture should have to account for all its emissions without an allocation, but Mr Williams said there were few mitigating measures available, and his research showed the cost of buying NZUs to cover for greenhouse gas emissions, would devastate the sector and thereby its export income.
His figures showed that at a carbon price of $25 it would cost farmers nearly $12,000 for NZUs and at $50 a tonne the cost would be nearly $24,000.
Mr Williams said the liability would add an extra 4% to 7% to working expenses and threaten the viability of those businesses, reducing their 2005-06 farm profit before tax by 42% at $25 a tonne and 84% at $50 a tonne.
In 2030, when those same properties have to account for all their emissions, that could equate to 4120 tonnes which, at $25 a tonne, would cost $103,000, or $206,000 at $50 a tonne.
"It would be very difficult to stay in business when this is 61% of total working expenditure and losses are so large," Mr Williams said.
He accepted his analysis had been criticised, but said it related to information now available.
"I have analysed how it stands at the moment and the numbers are quite big."
The sector has few mitigation tools immediately available, requiring farmers to be net purchasers of NZUs.
The size of farms and terrain meant nitrogen inhibitors were of limited use.
The Government has advocated forestry as a way to mitigate ETS costs, but Mr Williams said that could devastate sheep and beef numbers further.
Once carbon reached $40 a tonne, to maximise profit whole farms should be planted in trees, he said.
Between 1990 and 2010, it was forecast 6.6 million (11%) sheep and beef stock units and 408,000ha of sheep and beef land would have converted to dairying.
An initial analysis showed that if 10% of land currently farmed for sheep, beef and deer was planted in trees, an extra one million ha and six million stock units would be lost to pastoral farming.
Mr Williams looked at tree-planting scenarios to offset sheep and beef emissions which required planting 8.4% of pastoral land, which would provide an offset for 30 years.