The Australian dairy industry seeks regulatory and market reforms that will put downward price pressure on tariffs and charges for farmers and processors. We are strongly opposed to the proposal in the Government’s Energy White Paper to remove cross-subsidisation on network costs, which has, to date, partially smoothed the cost differences between urban and rural areas. We also seek secure and reliable supply in regional areas, and Government programs that will support increased uptake of new energy efficient or renewable energy technology.
Compared to other primary producers, the Australian dairy industry is disproportionately exposed to electricity costs due to the industry’s high power needs in milking machinery, cool milk storage, and intensive milk processing procedures. Analysis commissioned by Dairy Australia, indicates that typical dairy farmers are now spending between $20 to over $100 a day on electricity to power their dairies. Energy costs for running irrigation are additional.
The study also found that energy consumption over the 2010-13 period remained fairly steady, however rising tariffs, additional levies such as the carbon price and renewable energy schemes, and increasing network charges have contributed to daily costs rising 33-100 per cent for many dairy farms since 2010.
Australian dairy recognises that its potential to grow may impact on greenhouse gas emissions. There is a strong link between the industry’s target to reduce emissions intensity by 30 per cent by 2020, the industry’s use of electricity, and industry growth. Energy efficiency and new energy technology present significant opportunities for reducing the dairy industry’s energy use, costs and greenhouse emissions.
However, for all these opportunities, there are significant capital cost barriers. In many cases, Federal and State programs have assisted farmers and manufacturers with the upfront capital costs, thereby increasing their participation.
- Ensure government policy settings exert downward price pressure on network and other tariffs charged to agricultural commodities and processers.
- Endorse the establishment of Government incentive schemes to encourage the adoption of energy efficient measures and renewable energy technologies in agricultural industries, to offset the effects of rising electricity prices.
- Government to ensure new reliability standards for the same standard of service in rural and regional areas as enjoyed in urban centres.