Power shock sour for dairy industry

Rapidly rising power prices will likely shrink the milking pool and encourage farmers to seek micro on-farm energy alternatives.

Forecast energy price surges will send shockwaves through dairy farming and encourage producers at the end of their teat to exit the industry or pivot to beef.

United Dairy Farmers of Victoria president Mark Billing made the grim prediction following federal Treasurer Jim Chalmers last week flagging that energy consumers will be slammed with a 56 per cent power bill hike over the next two years.

The extraordinary increase will not only weigh heavily on an industry running energy hungry plant and equipment, but rattle supply chains, place downward pressure on farm gate prices and inevitably increase milk and other dairy retail prices.

Mr Billing also said that Australia’s energy crisis will slow food production as input costs soar and encourage farmers to accelerate costly plans to move off the grid and shift to sustainable energy sources to save money and avoid blackouts and brownouts.

“If power costs keeps blowing out like this we will see a reduction in the milk pool and a lot of dairy farmers will become beef farmers to avoid massive bills,” he said.

“Governments must recognise agriculture’s importance and the real cost of producing quality products. Australia is well-placed to keep producing clean, green dairy products and we need a strong agricultural industry to have a strong economy.”

Few, if any, of Australia’s 5200 dairy farmers, with more than 3000 of those in Victoria, will be shielded from the hike. The average producer already racks up over $40,000 a year in power charges, while many spend upwards of $100,000.

Mark Billing says Australia’s energy crisis will slow food production. Picture: Yuri Kouzmin

Mr Billing encouraged federal and state governments to look at the entire energy picture and “pull the levers” to help agriculture navigate diesel, gas and energy blowouts.

The price increase is also a double whammy for the many dairy producers who recently converted to electric irrigation pumps to avoid spiralling diesel costs.

Victorian Farmers Federation president Emma Germano said while governments were focusing on big ticket renewable infrastructure they were not helping farmers seek sustainable solutions.

“Declaring targets without a plan as to how you will reach them is dangerous. We certainly don’t have an energy solution for Australia at this point to transfer from traditional energy sources over to renewables,” she said.

“Producers now need to be moving to micro solutions on their own farm, but the majority of support and funding does not encourage that. Government must return to the drawing board and create a long-term strategic plan that balances the needs of the entire community”.