Confirmation that agriculture will not be covered by the carbon tax announced today by prime minister Julia Gillard and that agricultural fuel will be removed from the scheme has been welcomed by the National Farmers Federation.

The national farmer representative body said the Government's decision to invest more than $400 million into agricultural carbon mitigation research and development and extension, and to support food processors in their transition to a low emissions future, further demonstrated the Government had been listening to agricultral sector concerns about the carbon tax. 

“We are pleased to see movement in each of these areas, as well as measures to support non-Kyoto compliant CFI credits and to reward on-farm biodiversity projects,” NFF chief executive officer Matt Linnegar said.

“However, despite today’s concessions, independent research by the Australian Farm Institute over recent months has highlighted that additional costs from electricity and other indirect energy related sources will remain embedded in the carbon tax for all Australian farmers.

“This research shows that even with fuel excluded, the average Australian farmer will still incur an additional $1,500 a year in costs under a carbon price of $23 per tonne, eroding their net farm income by 2.4 percent.

“These costs will erode the competitiveness of the agricultural industry in the domestic and international markets on which we depend.

“As the recent Productivity Commission review highlighted, across the world, countries are developing climate policies that recognise the importance of agriculture and deliberately prevent any additional costs being added into their farmers’ businesses.

“For these reasons, the NFF and our members remain opposed to the carbon tax,” Mr Linnegar said.

“We also remain extremely concerned about the treatment of fuel. While we have today seen that agricultural fuel has been excluded from the carbon tax, we are concerned that heavy-vehicle fuel will only be excluded for a two year period, and that any future review of fuel excise could add additional costs into farm businesses.

“We will be critically analysing the information provided today, and working with all sides of politics to ensure our concerns are heard as the carbon tax goes before Parliament.".