Labour says if it is elected to Government it will bring agriculture into the ETS in 2013, requiring farmers to start paying a carbon charge for livestock emissions two years earlier than the current timetable.
It aims to use the income from that to pay for a 12.5% tax credit to encourage businesses to increase research and development spending.
But the farmer-levy funded body, Beef and Lamb New Zealand, says the agricultural sector is already paying for research to reduce farm emissions through the Pastoral Greenhouse Gas Consortium.
Chair Mike Petersen the extra cost, which he puts at $40,000 per farm, could destroy the sheep and beef sector.
Mr Petersen also argues that the sheep and beef sector has reduced its greenhouse gas emission levels significantly below Kyoto Protocol requirements and has so far produced carbon credits worth more than $800 million which have been pocketed by the Government.
Labour agriculture spokesperson Damien O'Connor agrees that the earlier introduction of agriculture into the ETS will put pressure on the sector to adjust.
But he maintains the charge for animal emissions will still form a very small part of a farm's total production costs.
And he says while it remains outside the ETS, agriculture is effectively being subsidised by other taxpayers to meet New Zealand's international commitments.