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Carbon tax to impact on vegetable industry

Carbon tax to impact significantly on vegetable industry

The recent carbon tax announcements from Government are enormously significant for the $1.5 billion per annum vegetable industry, Vegfed President, Mr Brian Gargiulo said today.

The tax on carbon dioxide emissions, which will add costs to all carbon-producing fuels, has been set at $15 a tonne and will take effect from April 2007.

The carbon tax is likely to see some growers forced out of business, particularly those within the greenhouse industry.

“Vegfed believes the cost for some growers could be as high as $250,000 a year. This is simply crippling, and worse, it won’t do anything to control CO2 emissions. It also has the potential to impact right through the supply chain as costs incurred must ultimately be passed on to the consumer through the price of fresh and processed vegetables”, Mr Gargiulo said.

A particularly disappointing factor is that the tax won’t change behaviour.

“Energy is an essential component to the vegetable industry, not just with regard to gas and coal use within the greenhouse industry but also for diesel and electricity use amongst outdoor growers. Due to rising energy costs, growers are already focused on being as energy efficient as possible,” Mr Gargiulo says.

“A system that taxes everyone, regardless of their efficiency, and then provides it back for energy efficiency programmes is not likely to work. It is effectively taxing those who are doing the right thing to reward those that aren’t.

Under the proposed carbon tax system, some larger businesses may have the potential to obtain a rebate on the tax through Negotiated Greenhouse Agreements (NGAs) but this will not be possible for the majority of growers,” says Mr Gargiulo.

“Despite the New Zealand vegetable industry including some large scale producers, we, like much of the rest of our economy, have many small businesses. The majority of our members are too small to manage and pay for the complexities of NGAs, and the recent package announced to help small businesses that are energy intensive won’t be nearly enough to help growers.”

“The vegetable industry will continue working with Government to ensure the industry remains competitive and sustainable and that the price of food is not artificially inflated by an inefficient carbon tax. However, we are very disappointed in what has been released so far,” Mr Gargiulo said.


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