The emissions trading scheme (ETS) will cost Fonterra and its suppliers $115 million a year by 2015 and potentially much more by 2030.
That cost was made up of $43 million in manufacturing emissions, $3.5 million for fuel, and costs for electricity, animal and on-farm emissions, which Fonterra would be responsible for because it was the sector's point of obligation.
"If these costs are passed back ultimately to farmers, it will have flow-on impacts to the economy and communities," Fonterra wrote in its submission to Parliament's finance and expenditure select committee.
The company's manager of sustainable production, John Hutchings, said in an interview those costs defied claims by some critics that agriculture was getting a free ride under the ETS.
From 2015 the sector would carry full ETS costs on electricity, fuel, fertiliser and 10% of animal emissions.
Those costs were abated at 1.3% a year up to 2030.
"We're carrying our fair share of the load," he said.
Mr Hutchings said Fonterra was the world's most efficient producer of milk products and New Zealand's largest export earner, yet would have to become even more efficient.
Since 1990, he said Fonterra had achieved a 34% improvement in processing emissions, made significant transportation gains, spent $10 million researching nitrogen inhibitors and its farmer suppliers had reduced on-farm emissions by 18%.
Mr Hutchings said World Economic Forum figures reveal that if 10% of the world's agricultural production was changed to match New Zealand's efficiency, it would save 187,000 tonnes of carbon dioxide.
He hoped next month's Copenhagen climate change conference would acknowledge that, as well as being carbon constrained, the world was also protein constrained in a world where the population was increasing.
Asked if Fonterra would be able to command premium prices because of the ETS, Mr Hutchings said it would ensure the company was "a first port of call" because it illustrated a commitment to sustainability, but he doubted prices would rise as a result.
He said customers tended to look for quality first, then price, then issues such as sustainable production.