Energy prices must drop for farm viability: Farm Institute
Author: Weekly TImes Now Date Posted:7 September 2018
The Australian Farm Institute’s report on energy costs in agriculture highlights the need for an “immediate reduction” in energy prices.
According to the AFI, Australian agriculture is “rapidly becoming uncompetitive against countries with cheaper and more reliable power”.
In some cases, farmers faced energy price rises of “up to 100 per cent in the last five years”, the report found.
However, the Federal Government also needs to deliver greater certainty around energy policies and electricity pricing, including renewable options to boost on-farm investment, according the think tank.
Report co-author Richard Heath said energy costs accounted for 9c in every farmgate dollar produced.
But some sectors were much more exposed to rising power price rises — for chicken meat and sugar, energy cost as much as 16c for every dollar.
For dairy and wine grapes, energy costs accounted for 13c.
The annual cost of all energy used by agriculture was estimated to be $5.85 billion, making the industry the fourth largest user of all sectors.
The study found fuel — diesel, petrol and oil — was the biggest energy cost for agriculture, at $2.5 billion annually, and electricity at $2.4 billion.
If power prices rose by a further 30 per cent and other sources 5 per cent, agriculture would be up for an additional $863 million annually.
Mr Heath said it was “clear many farm businesses are looking to alternative energy sources, be that diesel, solar or wind, to supplement the grid supply”.
There could be significant ramifications for the grid if a large number of users left the electricity supply.
Energy Minister Angus Taylor has stated his main goal is lowering energy prices, but how the government intends to do so remains unclear.
National Farmers’ Federation president Fiona Simson said energy costs were “spiralling” and for some businesses had tripled in the past two to four years.
“That places enormous strain on industry and in Australia we do not get subsidies that many other countries’ farmers get,” she said.
“We are hearing anecdotally that people are dusting off their diesel pumps again because it is cheaper.”
She said farmers looking at alternative energy sources would also like greater energy policy certainty. “We have had no energy policy certainty for 10 years,” she said.
Ms Simson said farmers wanted affordable, reliable power and they were “technology-neutral” about where it came from.
Farmers for Climate Action chief executive officer Verity Morgan-Schmidt said the AFI report highlighted the need for informed national policy.
“We have watched with frustration as recent political debates over energy prices have automatically, and incorrectly, concluded that investment in fossil fuels will bring costs down,” she said.
“This debate is being fuelled by misinformation and a mistaken assumption that farmers support investment in fossil fuels over renewables.”
Dairy Australia’s Ian Olmstead said energy prices were hurting profit margins for farmers and processors.
“Farmers are hit by energy costs twice,” he said. “They pay on-farm and also at the processor level.”
