Australia’s largest meat processors will face dramatic cost increases under the Federal Government’s proposed carbon tax.

Any company that produces 25,000 tonnes or more of carbon dioxide equivalent emissions per year will be directly included in the carbon pricing scheme, unless it falls into an exempt industry.

The Australian Farm Institute has estimated that six to eight meat processing facilities could be included in the 500 or so companies that are likely to be directly affected by the carbon tax.

Meat processing activities generate carbon dioxide equivalent emissions principally from heat generation and waste-water treatment processes.

One Australian facility modelled in a recent AFI analysis of carbon tax impacts was estimated to generate about 30,000t of CO2 equivalent emissions per year.

Based on the announced carbon price of $23/t, that equates to a direct cost of $690,000 for that site in year one under a carbon tax.

Large processors will incur a direct cost impact while smaller processors that slip under the 25,000t threshold will not.

“It is almost the reverse of what you would think,” Australian Farm Institute executive director Mick Keogh said. “You would think it is better to have a big efficient plant, but it potentially creates an incentive to go the other way.”

Another key issue for processors is whether they will be eligible for export concessions.

When the then Rudd Government proposed the Carbon Pollution Reduction Scheme in 2007, some energy-intensive but export dependent businesses were entitled to rebates of up to 95pc of permit costs in year one, reducing by 1.3pc per year.

Meat processors however were not eligible for export concessions under that plan, which would have meant they would have been subject to the full permit costs from day one.

In his initial analysis of the detail of Julia Gillard’s proposed carbon tax, Mr Keogh said it appeared the same rules would apply this time as well.

“I can’t see there is any variation on that, it is as if they have adopted the same broad rules that they had under the CPRS proposal so I suspect that problem is going to re-emerge.”

The Government has said it will provide $150 million in grants to help the food processing industry invest in energy efficient equipment and low emission technologies, processes and products.