It is easy to see villains in the fight against climate change: look up, aircraft contrails scar the sky; drive around town, cars and lorries belch fumes; industrial chimney stacks chainsmoke on a grand scale; household lights are left on and televisions run idly on standby. But in New Zealand, politicians and bureaucrats have in their sights the humble cow.

Cow plus grass equals, among other things, methane - and methane is a greenhouse gas. Indeed, agriculture is responsible for about half of greenhouse gas emissions in New Zealand, which is projected to overshoot its Kyoto target significantly. Nitrous oxide, which is emitted from animal waste and fertilisers, accounts for 17 per cent of the country's total. Methane from livestock, with dairy cattle at the fore, contributes a third. On a per capita basis, livestock alone makes New Zealand a greater per capita emitter than China.

Thus, tucked into a climate change bill now before parliament is an emissions trading scheme that is worrying farmers. In a few years, every time that they set the automatic milkers humming or a cow does what cows do in the paddock, they will be exposed to the full cost of carbon.

Charlie Pedersen, the president of the lobby group Federated Farmers of New Zealand, acknowledges that there is a perception that farmers are getting away scot-free. Agriculture has been excluded from the trading scheme, which will be rolled out from next year, until 2013. Greenpeace complains that even after that date the Government will subsidise the sector until 2025.

But Mr Pedersen pleads that the scheme will impose only economic hardship for little environmental benefit, with New Zealand's emissions accounting for only 1 per cent of the global total. “In the countries we export into, there are enough barriers at the moment,” he says, “but we'll be the only farmers in the world exposed to an emissions charge.”

A Ministry of Agriculture analysis concludes that, even allowing for initial grandfathering, the profitability of a typical dairy farm could be cut by between 12 and 13 per cent. It adds that the impact can be reduced by planting trees or using sprays that can inhibit nitrous oxide.

Indeed, scientists in Australia and New Zealand said this week that they were developing a strain of “burpless” grass for cows that would maintain dairy herds' productivity and profitability while reducing their wind problems. The region's farmers will be eagerly awaiting further details.

Market leader

— Fonterra is the world’s largest dairy exporter and fifth-biggest dairy company, controlling a third of the export market

— The group exports milk-based products to 140 countries, including dairy ingredients, liquid and powdered milks, cultured foods and yoghurts, butter and cheese

— Fonterra is an unlisted cooperative and is New Zealand’s biggest company by turnover

— Its turnover of NZ$13 billion (£5.1 billion) is equivalent to 6.5 per cent of New Zealand’s GDP

— It is a leading supplier to Nestlé, Danone and Kraft

— New Zealand exports 95 per cent of its dairy produce

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