Irish finance minister Brian Lenihan has delivered a far from festive present for the country’s growers in his pre-Christmas budget - a carbon tax.

Higher petrol and diesel prices took effect immediately as a result of the tax, which is being levied on fossil fuels at the rate of €15 (£13.45) per tonne of carbon dioxide emitted. Growers will face their increased bills from next May, when the cost of gas and heating oil are also set to rise.

Introducing the new measure, which is expected to raise €330m a year, Lenihan claimed carbon taxes would be a feature of economies across the world in the coming years. “This announcement sends a positive signal to those gathered in Copenhagen, working for an ambitious agreement on climate change, about Ireland’s capacity to show leadership,” he declared.

For the growers, there are more practical questions - how much will the new tax add to their production costs, at a time when they are already struggling with a recession, competition from cheap imports, and the worst weather for years. Some in the protected crops sector, which will foot the increased bills, say they are operating on a knife-edge and that any additional burden is unsustainable.

“Our energy costs are already among the highest in Europe,” said one grower, “and we have the second-highest minimum wage in the EU, plus a differential with sterling that’s killing us. We can’t afford to pay any more - it will put more us out of business.”

The Irish Farmers’Association (IFA) agrees and will be campaigning between now and May to have the industry, including horticulture, exempt from the tax. “We don’t have the option of alternative fuels,” says IFA president Padraig Walshe, “and we cannot pass on the higher costs to the market. To prevent further hardship, the government should follow the example of France, which is offsetting the carbon tax for its farming sector.”

The tax controversy comes as new figures from Bord Bia show that the Republic’s fresh produce market has fallen by almost three per cent in the year so far and is now worth €1.2bn. Over the year, the average spend per buyer dropped by 6.2 per cent to €744, reflecting the tightened purse strings of Irish consumers. The prepared fruit and vegetable sector has fared better, maintaining its value so far this year at €84m.

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