The carbon tax proposed by the Green Party would punish dairy farming and shift production offshore, according to Federated Farmers.
However, the Greens have countered that setting a price on carbon would provide certainty and encourage innovation in mitigating carbon emissions.
The Greens have proposed a tax of $25 a tonne; dairy farmers would pay $12.50, while sheep and beef farmers are excluded from the policy for the time being.
Both National and Labour have said they remain in favour of the current emissions trading scheme (ETS).
Green Party spokesman Andrew Campbell said dairy farmers would end up paying 8c per kilogram of milksolids. This year's milksolids payout totalled $8.40, but it is set to drop to $7 in the coming season.
Campbell said the Greens modelling showed that the sheep and beef sector would become vulnerable under the policy and "marginally profitable", so was excluded for the time being. The sector's net emissions had lessened so it was less of a problem than dairy.
Federated Farmers climate change spokesman Dr William Rolleston said New Zealand farming had been cutting emissions in each unit of agricultural output by 1.3 per cent a year and was leading the world in agricultural greenhouse gas research.
However, Campbell said that while emissions per unit might have dropped, the total number of units had increased because of the dairy boom.
"Dairy is also up against the limits of growth. Part of what we are trying to do is provide leadership and there will need to be responses by other countries as well," he said.
Under the policy farmers would receive a 1 per cent cut in company tax to 27 per cent. They will also be eligible to offset the carbon tax if they undertook planting along streams or grew forests.
Rolleston said the Greens report on the tax admitted 10 per cent of dairy farmers would be vulnerable under the policy. It was a "confused" message.
"If it is a leadership role we want to provide, then we would want to improve farming productivity rather than punish farmers for their high productivity.
"If you punish carbon-efficient farmers and drive production offshore, there will be a net methane increase," Rolleston said.
"We need a global response to the problem, we are far too vulnerable to go out on a limb," he said.
Taxpayers' Union director David Farrar backed the Greens, saying it made sense because the policy gave certainty, provided incentives and was tax neutral.