The head of the Australian Farm Institute, Mick Keogh, says a carbon trading deal with Europe is mixed news for agriculture.
The Institute's research has highlighted opportunities for farmers under the carbon farming initiative, but has also pointed to increased costs for processors and industry.
Mr Keogh says the Federal Government's decision to link into the EU's carbon market, where credits are currently trading at $10 per tonne, and to walk away from an Australian floor price for carbon of $15 per tonne, means energy-intense industries like dairy and meat processing will see smaller cost increases.
But he says the deal is bad news for farmers hoping to make money out of the Government's Carbon Farming Initiative.
"Those projects' revenue streams now look decidedly less certain and certainly lower," he said.
"Up until now, of course, you could have budgeted for at least $15 per tonne carbon [floor] price into the future and potentially higher longer-term. That is less certain now."
The Federal Government says indications point to a recovery in the European carbon price by the time trade begins in 2015.
The Parliamentary Secretary for Climate Change, Mark Dreyfus, says European credits have traded for an average of $23 per tonne in the past, the same as Australia's current fixed carbon price.
And Treasury expects European credits to be trading at $29 per tonne in 2015.
Mr Dreyfus says the EU deal will not affect the competitiveness of credits generated by the Carbon Farming Initiative.
"We think that there is going to be sufficient [domestic] demand, and we think that the price when we move to the full emissions trading scheme is going to rise," he said.
"It's three years off. You've got to look at past performance as an indication of that, and you shouldn't be taking the spot price today as some indication that that's going to be the same spot price in three years' time."
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