The Victorian Dairy Industry is facing major cost blow outs over the next 12 months thanks to increasing energy prices, Member for South West Coast Roma Britnell says.
Mrs Britnell said new analysis from the research and development corporation Dairy Australia shows that dairy processors are facing increasing costs of power between 50 and 70 per cent in 2018, and is a real threat to the future of the industry.
She said the analysis shows electricity and gas price rises will add $100 million of costs that industry spend on power – making milk less internationally competitive and threatening the viability of the industry.
Mrs Britnell said the increase would slash processors margins and push down further the price paid to farmers, adding to financial strain.
“The analysis also shows that on farm, producers are facing an average energy bill increase of $3760 over the next 12 months,” she said.
“The average $14,000 per farm increase in costs for processors will also be passed onto the farmer – effectively they will pay twice for energy increases.
“The looming energy crisis needs urgent attention. Dairy products are in demand all over the world and it is foolish to have our own domestic policies crippling us. The last thing farmers need is more financial pressure because of inaction on energy prices.
“This is a problem right now – industry cannot wait until 2035 when the Minster for Energy suggested renewable energy projects would start putting downward pressure on prices.
“The dairy industry employs around 6000 people directly on farms and in processing. Increased costs directly threaten these jobs.
“We are at risk of destroying an industry that is a viable and in demand. Driving up the cost of doing business will mean investors will start looking overseas instead of Australia which Dairy Australia predicts in its analysis.”