Energy price rises: How higher bills will hit farmers

A leading dairy farmer has revealed how much the energy crunch is costing his business – and he blames energy companies.

Soaring energy costs are squeezing Australian farm profit margins — and the consumer will have to pay more to cover costs.

The Organisation of the Petroleum Exporting Countries this week confirmed it would maintain a cap on oil extraction until October, sending fuel prices soaring.

The announcement coincided with the world’s largest oil producer, Saudi Aramco, revealing it earned $US161 billion ($A243 billion) last year, the highest-ever-recorded annual profit by a publicly listed company.

EastAusMilk vice president Peter Graham said the price gouging by energy producers both at home and abroad was hitting primary producers.

“But eventually, the consumer will have to pay more, or more farms will go out of business,” Mr Graham said.

“This is fairly and squarely a problem caused by energy companies, which have been doing very well for themselves recently.”

Saudi Arabia, Russia and other top oil producers agreed on a major cut in production on Wednesday to boost crude prices. (Photo by Frederic J. BROWN / AFP)

Mr Graham said his electricity bills had risen from $6500 a quarter last year to $8000 a quarter with his most recent invoice.

“Not only are we paying $1500 more with power, we’ve supplemented that with a diesel generator, which costs about $1000 a quarter. That’s an expense we didn’t have before.

“Add to that, the diesel involved with irrigation and we’re talking about $4000 extra per quarter. Those costs have to be covered somehow.

“Farmers are wearing those price rises now but eventually, that will be passed onto the consumer.”

In its latest situation and outlook Report, Dairy Australia pointed to rising energy costs as a cause behind the nation’s shrinking milk pool.

The dairy authority anticipates Australia’s milk production to decline between four and six per cent this financial year, compared to the 2021-22 season.