July 26, 2011
 

Australia's carbon tax may result in higher costs for dairy industry

Australia's dairy processors generally agree that the new carbon tax levied by the government will cost the industry.

As a trade exposed industry, dairy processors said they will not be able to pass the added costs associated with the climate plan on to customers, resulting in farmers being the most likely to bear the rise in utility costs.

Recently Prime Minister Julia Gillard announced a carbon price of AUD23 (US$25.14) a tonne.

Dairy giant Murray Goulburn expects the plan to cost the co-operative about AUD15 million (US$16.4 million) a year based on greenhouse emissions of 638,000 tonnes of carbon dioxide last year.

MG general manager of industry and government affairs Robert Poole said the cost to dairy farmers was expected to be between AUD5,000-7,000 (US$5466-7652) a year, up to AUD5,000 (US$5466) of which would come from the potential costs imposed on MG by the plan.

Poole stressed that MG would work "very hard'' to minimise the cost to farmers by working with the government on the carbon farming initiative, and also focusing on limiting its emissions.

Fonterra said the carbon price was a "complex piece of legislation", and it was currently reviewing it to get a full understanding on the potential impacts to its business, a view shared by other dairy industry processors.