En­ergy costs could rise 20 per cent

Dairy News Australia - - NEWS -

DE­SPITE ACHIEV­ING dra­matic on-farm en­ergy sav­ings dur­ing the past five years, dairy farm­ers face the prospect of a 20 per cent price hike to­talling mil­lions of dol­lars in the cost of elec­tric­ity and gas to fuel their en­ter­prises. This is just one con­clu­sion in a re­port pre­pared for the Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion’s in­quiry into re­tail elec­tric­ity sup­ply and pricing. The in­de­pen­dent eco­nomic anal­y­sis, pre­pared by the Sapere Re­search Group Lim­ited, was com­mis­sioned by the Na­tional Ir­ri­ga­tors’ Coun­cil for the Agri­cul­ture In­dus­tries En­ergy Task­force. Dairy Con­nect CEO Shaughn Mor­gan said the find­ings “shine a bright light” on com­plex fi­nan­cial re­la­tion­ships be­tween Aus­tralia’s pri­vate­ly­held en­ergy pro­duc­ers. “Sky-rock­et­ing elec­tric­ity costs mean that Aus­tralia was los­ing in­ter­na­tional com­pet­i­tive­ness for agri­cul­tural prod­ucts and this hit dairy and ir­ri­ga­tion farm­ers hard­est,” he said. “The im­pact is par­tic­u­larly se­vere on ir­ri­gated agri­cul­ture that needed to pump water. “This im­pact is an­a­lysed closely in a dairy farm en­ergy cost case-study that forms part of the re­port to the ACCC. “It clearly enu­mer­ates how dairy pro­duc­ers are pay­ing twice for en­ergy cost hikes. They pay once at the dairy shed and again at the farm gate in the form of price cuts for their pro­duce.” Elec­tric­ity and gas ac­counted for a sig­nif­i­cant pro­por­tion of costs of dairy pro­duc­tion, ac­cord­ing to the re­port. Dairy Aus­tralia has es­ti­mated that the to­tal cost of en­ergy for dairy pro­ces­sors was about $160 mil­lion a year. This num­ber was set to rise by tens of mil­lions of dol­lars as long-term con­tracts were rene­go­ti­ated. Costs are passed back to dairy farm­ers through a lower farm gate milk price. Elec­tric­ity ac­counted for a sig­nif­i­cant pro­por­tion of a dairy farm’s shed cost, which var­ied from $17 000 to $40 000 on av­er­age per year with a na­tional three-year rolling av­er­age $24 200 a year. In 2012, Dairy Aus­tralia, in a re­sponse to con­cerns about the ris­ing cost of elec­tric­ity, ob­tained grant fund­ing from the Fed­eral Govern­ment to de­liver the ‘Smarter en­ergy use on Aus­tralian dairy farms’ pro­gram whose pur­pose was to help pro­duc­ers im­prove their en­ergy ef­fi­ciency. The pro­gram en­abled 1400 dairy farm­ers, or 21 per cent of the in­dus­try, to ac­cess per­son­alised on-farm en­ergy as­sess­ments, work­shops and in­for­ma­tion re­sources. Dur­ing its five years, the en­ergy ef­fi­ciency pro­gram, av­er­age dairy farm elec­tric­ity costs had risen be­tween 26 per cent and 65 per cent across Aus­tralia, with in­creases av­er­ag­ing 48 per cent na­tion­ally. Around two thirds of the farm­ers who had had en­ergy ef­fi­ciency were ob­tain­ing the ben­e­fits of hav­ing iden­ti­fied ar­eas for im­prove­ment and were in­vest­ing in changes. As a re­sult of this en­ergy ef­fi­ciency in­vest­ment, more than half of par­tic­i­pat­ing dairies iden­ti­fied sig­nif­i­cant en­ergy sav­ings that translated into cost sav­ings of up to $2000 per year, 40 per cent made sav­ings of be­tween $2000–$10 000 and 5 per cent — up to $29 000 an­nu­ally.

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