Wanaka Agriculture, the country's largest export earner, could disappear under a sea of costs by 2025, under the Government's proposed emissions trading scheme, a report warns.
Meat and Wool New Zealand senior economist Con Williams said at a carbon cost of $25 a tonne, sheep and beef farmers would pay $38,500 a year to fund their emissions.
If the carbon cost was $125 a tonne, the expense would leap to $190,000.
Translated in to profitability, Mr Williams said for an average farm the net profit over a 10-year period would fall 62% at $25 a tonne, and there would be no industry at $125 a tonne.
Mr Williams told a joint conference of the New Zealand Institute of Chartered Accountants and the New Zealand Institute of Primary Industry Management that there was no certainty the international carbon price would stay at $25 a tonne.
The emissions trading scheme (ETS) would become the biggest cost for farmers apart from debt servicing, representing 24% of current total expenditure at $25 a tonne and 120% at $125 a tonne.
National Party agriculture spokesman David Carter told a Federated Farmers high country committee conference in Wanaka that he believed the Government would pass its ETS policy into law within the next few weeks, with support from New Zealand First.
"There is a question mark around the Greens and how far they will push the Government.
"I can't see the Greens going to the next election not having supported it."
The policy puts a price on carbon emissions in order to change behaviour.
New Zealand Units, which are equivalent to one tonne of carbon, can be traded to offset emissions or as reward for the reduction of emissions.
Under the proposed policy, farming would be liable for 90% of its 2005 carbon equivalent emissions by 2013. Any Government-allocated free New Zealand Units for the sector would be phased out between 2018 and 2030.
Agriculture was the country's largest emitter of greenhouse gases, but so far no other country in the world had included agriculture in ETS.
Sheep, beef and deer contributed 29% of New Zealand's emissions.
Dairy contributed 17%, but that was increasing as the sector grew.
Mr Carter said his party agreed in principle with the ETS policy, but it did not take account New Zealand's unusual emissions profile.
The problem was that farmers had few ways to reduce emissions other than the reduction of stock numbers.
There was little technology available other than nitrogen inhibitors, but sheep farmers were small users of the product.
Mr Williams agreed, saying mitigating technology was unknown.
Nitrogen inhibitors could encourage more methane production, because pasture production increased with their use.
Farmers could control that by running more cows, which led to more methane production.
Trees were an option to offset emissions but, depending on the type of farm, up to 15% of a farm could be needed for planting, he said.
Once the trees were harvested, land owners were required to fund the carbon the trees had absorbed.
Mr Williams had seen research that found if all New Zealand's land mass was planted in trees and left untouched, it would soak up only seven months of greenhouse gas emissions from China and the United States.
Mr Williams said New Zealand was the world's most efficient farming nation in terms of greenhouse gas emissions.
But meeting the full cost of emissions would cost up to $1.2 billion.
At $25 a tonne, emissions would cost sheep farmers $9 a stock unit, beef $8.70, dairy cows $9.50 and deer $9.10.
At $125 a tonne sheep increase to $44.90, beef $43.70, dairy $47.60 and deer $45.60.
The cost of fuel and fertiliser would be extra.
Extensively managed farms would be hit hardest because of the number of stock carried. with the the ETS accounting for 30% of all expenditure.
The scheme would soak up 23% of costs on intensively farmed properties.
