Energy crisis could hit food production

by | Jun 15, 2022 | Australia, News

Industry bodies are warning rising energy prices could slow food and fibre production, exacerbating the impact of fertiliser shortages and increase input costs. Gas and electricity prices are being pushed up across Australia due to a combination of increased competition for gas sources outside of Russia, winter, gas supply shortages and coal-fired generators.

National Farmers Federation (NFF) president Fiona Simson warned that increased costs would drive up input costs for farmers with a trickle-down effect on food production and supply chain costs. Simson said agricultural commodities are exposed to energy prices and are especially vulnerable to the increases in electricity prices happening now with dairy, horticulture and irrigated farmers at risk. Simson said in the processing sector every dollar spent on farm equals a dollar spent on electricity. According to NFF a typical dairy farmer spends between $200,000 and $250,000 a year on electricity and calculations from Austrade puts the combined cost of fertiliser and fuel for dairy farmers at 9.5% of their total cash costs. Simson warned a domestic and global energy crisis would have significant flow-on effects on food and fibre production. The average price of Australian fertiliser imports rose 128% last year to $867/t the energy crisis expected to impact availability and cost of fertilisers because their manufacture is extremely energy sensitive.

Meanwhile, other farmer lobby organisations are warning consumers can expect price hikes on dairy staples such as butter and cheese. South Australian Dairy Farmer Association’s chief executive officer Andre Curtis said rising energy and fertiliser costs has pushed up production prices in an electricity-intense industry that needs refrigeration in every stage of production.