EMISSIONS trading could see forestry land being converted to farmland returned to forestry, the Australian Farm Institute says.
And executive director Mick Keogh says the carbon debate is "dancing around" the reality that the energy sector needs to reduce its emissions.
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Mr Keogh said it was "probable" that land returned to farming would later be put under carbon sink plantations.
"In the Canterbury region in New Zealand, dairy farms were sold to forestry, went through one rotation, then with the recent history of strong dairy prices and poor returns for forestry commenced going back to dairy," Mr Keogh said.
"Then last year the pendulum swung back to forestry (when the NZ emissions trading scheme came in)."
Australian land put under a carbon forest would likely not be returned to agriculture because the Carbon Farming Initiative rules required carbon sink plantations to stay in the ground for up to 100 years, he said.
Mr Keogh said the longer the trees were in the ground and more carbon they offset, the more expensive it would be to bulldoze the trees and convert back to farmland because the landowner would need to buy back the carbon credits.
"We're dancing around the fact that if we really want to achieve emissions reductions, almost 60 per cent of emissions come from the stationary energy sector (coal and gas)," Mr Keogh said.
The original Carbon Pollution Reduction Scheme would not have seen big polluters reduce emissions - they would instead have paid for trees to be planted on food-producing land, he said.
The trading scheme now being worked on would likely end up very similar to the CPRS, according to Mr Keogh.
Mr Keogh said a rise in electricity prices would be less hurtful to the farm sector than a rise in fuel prices.
Sustainable Agricultural Communities Australia director Rob Belcher said food-producing land should be "sacrosanct".
"Food production is non-negotiable," Mr Belcher said.
"We've just wasted $10 billion on managed investment schemes, destroyed high rainfall country, and contributed to rising food prices."
