Australia has some of the highest energy prices in the world, and this erodes our ability to be competitive in the global market place. The Federal Government must address the industry and market reform necessary to fix the broken regional electricity pricing system.
Affordable electricity prices are vital inputs to efficient and productive farms. Modern agricultural enterprises have progressively become more intensive users of energy to secure efficiencies of labour, water and other inputs and as innovation in the sector grows this will continue.
The rising costs of inputs in agricultural production, such as electricity, are largely not able to be passed on to consumers and burgeoning costs farmers have little means to control are eating away at the profitability of the sector.
Average electricity prices in Australia have grown by 40 per cent since 2007, which cost increases for electricity in irrigation in excess of 100 per cent for most and as high as 300 per cent for others over the same period. This sharp increase in cost is largely the result of new, and often unnecessary, investments in electricity networks.
Government regulated network costs and other charges account for around 70 per cent of a farmer’s electricity bill. And while renewable energy may well be the game changer of the future, renewables do not yet have capacity to store and release vast amounts of energy at peak loads.
In the case of irrigated agriculture, modern, water use efficient systems are energy intensive and soaring prices have led to farmers reverting to the use of diesel generators to meet electricity requirements in a more cost effective manner. In more remote areas that are not serviced by the electricity grid, farmers are also reliant on diesel generators making them also vulnerable to increases in fuel price.