THE Federal Government's pledge to create nationally consistent industrial relations laws will be jeopardised unless the states refer their industrial relations powers to the Commonwealth, the NFF says.

National Farmers' Federation President David Crombie said most states realize that maintaining multiple workplace systems placed unnecessary burdens on business.

"Of principal concern to farmers is the fact that over 90 per cent of Australian farms are small family-owned businesses and, therefore, are unincorporated businesses," Mr Crombie said.

"This means, should negotiations fall over, farmers would fall outside of the Federal Government’s Constitutional power to make laws as they apply to corporations.

"If all states do not come on board with one national system, most of Australia’s 155,000 farms and their almost 300,000 employees will be stranded in various state systems.

He said the Australian farm sector needed the states to refer their powers for there to be any benefit for farmers.

"We’re relatively comfortable with the draft legislation as it stands," Mr Crombie said. "However, the operation of the legislation needs to be assessed on the final text of the Bill and the NFF is keen to analyse how the final Bill will apply to farmers in practical terms, having brought together the many reform components."

The final Bill is due to be introduced into Parliament later this month.