If only farmgate milk prices would rise as quickly as energy prices.
A report from the consumer watchdog has confirmed gas prices will continue to rise as Australian companies preference international spot markets.
Australian farmers, seeing modest increases in farmgate prices at best, will cop a double hit from this price surge, as gas is required to produce electricity; and processors will seek to recover rising gas prices through lower farmgate prices.
The ACCC has described the situation as serious and that options to address the problems in the immediate term are limited.
The Federal Government has implemented the Australian Domestic Gas Security Mechanism (ADGSM), which allows for the restriction of LNG exports in an expected shortfall year, with the aim of directing those supplies to meet domestic demand.
However, more needs to be done to find a long-term solution.
State governments on our east coast can help.
There are five gas suppliers in Western Australia, and prices are competitive as a result.
The ACCC’s call that more suppliers are needed in the southern states, and that blanket moratoria should be removed, mirrors that made by Saputo earlier this year.
In a submission to the ACCC, Saputo warned that the cost of gas for its Allansford plant will increase by 50 per cent from 2018 due to “government policy restricting gas exploration”.
The Victorian Government has placed a moratorium on conventional gas exploration until 2020. This should be immediately reviewed as conventional gas exploration does not have the same concerns as unconventional gas, also known as hydraulic fracturing (fracking).
The same urgency is required in South Australia — where farmers are returning to diesel generators to avoid power blackouts and rein in costs.
The SA Government is in a muddle — rising power costs but no incentives for farmers to transition to solar or wind.
Federal and State governments need to produce clear energy policies devoid of political point scoring to get Australia out of this mess. Unfortunately, we’re not confident they will until it’s too late.