But it says more investment in research is needed if agriculture is to cope with rising costs it expects to be passed on to producers.

Cattle Council of Australia president Bill Bray says there needs to be recognition that transaction costs of full inclusion of agriculture in an emissions trading scheme would be high.

"However, Cattle Council is buoyed by comments in the report that reinforce the need for more reliable and cost-effective ways to measure or estimate net emissions," Mr Bray said.

"We support Garnaut’s recommendation that the Government, as a priority, must invest in helping agriculture develop better measures or estimation tools for emissions and develop more mitigation options for producers. The full carbon cycle must be recognised.

"Increased research will assist in developing these critically important tools for beef producers. Without reliable estimation, it is difficult to include the sector in an emissions trading scheme."

The National Farmers' Federation has also backed the bulk of the recommendations, saying agriculture can play a role in Australia reducing its carbon emissions, but only if the policy settings are right.

Prof Garnaut has backed the role of using rural lands – via soil or vegetation – in bio-sequestration, but he says the Kyoto rules need to change to accommodate this, and better measurement systems need to be found to account for the amount of carbon being taken in by these natural sinks.

"More reliable and cost-effective ways to measure or estimate net emissions are needed in the land use sector," Prof Garnaut's report states.

"Without reliable estimation, it is difficult to include the sector in an emissions trading scheme."

The NFF agrees, saying that for Australian agriculture to be adequately covered in any future ETS, the international accounting rules must acknowledge the sector’s full life cycle.

"Until such time as reform of these accounting rules is achieved, any ETS including agriculture would see Australian food production bear a grossly disproportionate burden," the NFF response states.

"We may find that alternative market-based policies are more appropriate to delivering mitigations outcomes from agriculture.

"The NFF contends that food production is different, and must be viewed differently, in that, Australia’s climate change response must not be geared towards curbing food production.

"Rather, that incentive-based measures are more appropriate to support food production needs – both here in Australia and, increasingly, for international markets – and practical reductions in on-farm emissions.

"The capacity for agriculture to dramatically reduce its carbon footprint are limited.

"That said, Prof Garnaut has stated that Australia’s agricultural base is a lower emitter than other developed countries – largely owing to Australian farmers’ commitment to environmentally-sustainable farm practices.

"Given this commitment, the scope for making further cuts to emissions in Australia is limited.

"Therefore, Australia must ensure it doesn't trade-off its effective, efficient and low emitting farm sector in trying to address the issue of climate change."