A heavyweight climate change report commissioned by Chancellor Gordon Brown and published this week will have a far-reaching economic impact on the entire food chain, but could offer opportunities to farmers.

DEFRA secretary David Miliband said food and farming was a big contributor to carbon emissions and would need to be at the forefront of new efforts to tackle global warming.

The 700-page report, written by Nicholas Stern, a senior government adviser and former World Bank chief economist, urges immediate action on climate change. It is set to be a key influence on future UK environmental policy that will see government targets, like CO2 reduction, enshrined into legislation.

Plans to increase carbon emission trading, where those industries producing larger amounts of CO2 will have to buy extra quota from more environmentally friendly businesses, have also been unveiled.

Farming and its associated industries have already been named as large-scale polluters, with methane from livestock considered to be one of the major contributors to greenhouse gases.

The Stern report also picks out fertiliser use in agriculture as producing one third of agricultural carbon emissions, raising fears of import or production taxes.

‘Crucial role’

But Jane Salter, head of environmental policy at the Agricultural Industries Confederation, said fertiliser taxation to restrict greenhouse gas emissions would be inappropriate. “The energy costs of production, transport and field application are far outweighed by the solar energy captured by greatly increased crop yields,” she said.

NFU president Peter Kendall said farmers had a crucial role to play in combating climate change. “My overriding ambition is for British agriculture to be part of the solution, not part of the problem.”

Mr Kendall said he hoped the government would use an incentive approach to encourage the use of flex-fuel vehicles capable of running on high blends of biofuels.

“We will achieve far more by incentivising farmers to reduce the negative impact that farming has on climate change than by threatening them with new taxes or controls.”

NFU chief economist Carmen Suarez said agriculture had a role to play in informing government decisions. “There are big opportunities for farming to help this debate through biofuel production, and to that end we question the reasons for maintaining set-aside in this country.”

Tax breaks on anaerobic digesters meant opportunities for those in the livestock sector as well, added Ms Suarez.