Energy crisis hits farm sector

By Hugh Christie on
07 July 2023

The rising cost of energy has been at the forefront of many people's minds over recent weeks, including our members and the broader agricultural sector.

Farmers operate in a highly competitive business environment and increasingly the industry is utilising more energy with intensive technology. This makes energy a critical part and a significant cost when it comes to agricultural production.

The recent announcement of rising power costs is a distressing reality and will have a detrimental impact on farmers and the entire agricultural supply chain.

Read More: Acclaimed Farm Foresters Share Insights with Tasmanian Landowners

Consider, for instance, the chicken sheds that demand enormous power to maintain regulated temperatures. It becomes evident that the burden of rising electricity prices permeates throughout the entire agricultural sector, affecting diverse enterprises with distinct electricity requirements.

Or the dairy farm which has been active in implementing energy efficiency measures but still has a $120,000 energy bill, with their energy contract up for renewal. This is likely to increase by between 20-30% on their energy costs going forward.

This painful reality is repeated across agriculture, with access to affordable, reliable energy is key to continued sustainability and enhanced growth if Tasmania is to achieve the Government’s target of $10 billion annually in farm gate value as a state by 2050.

We must also keep in mind the ability of agricultural businesses to remain globally competitive in this environment today and into the future is dependent on the proportionate cost of energy.

As the fourth largest consumer of energy in Australia agriculture is only surpassed by manufacturing, transport and mining. Most of Australia's industry has achieved significant gains in energy productivity over the last decade, however, agriculture is the exception.

Read More: Keeping the Argument Real

The Farming Institute of Australia describes energy productivity as having declined more than 21% between 2008 - 2018. Despite the advances in technology and investments to improve optimal performance across supply chains, the trend is likely to continue given the increased reliance on automation and technology.

In light of this projected rise in energy prices and the pressing concerns regarding critical dependencies and supply chain vulnerabilities in 2023, it becomes crucial to grasp any opportunities to protect our productive capacity.

It is an unjust burden on farmers which will not only cause financial strain but will ripple through the entire food and fibre chain and further compound inflationary pressures. The rising power prices are suffocating our farmers and pose a significant threat to Tasmania's agricultural sector as a whole.

Read More: TFGA President praises outgoing CEO Hugh Christie for strengthening farmers' voice

This includes governments needing a comprehensive understanding of the complex market dynamics that influence prices, informing the development and execution of equitable, cost-effective, and environmentally sustainable energy policies and strategies.

If we are to realise our shared aspirations for the sector, policymakers and stakeholders must take notice of this alarming situation and work together to take steps to alleviate the strain on farmers.

It is time we recognise the hardship faced by those who seek to feed the nation and take action to give them the necessary support, failure to address the issue will not only impact farmers but will risk our food security and the stability of Tasmania's economy