How energy price increases are hurting farmers

Rising electricity and gas prices have added money and pressure to the cost of farming, with some reporting annual increases of more than $20,000.

Rising electricity and gas prices in Australia have added tens of thousands of dollars to the cost of farming in recent years, adding further pressure in a cost of living crisis.

Callum Moscript is a third generation dairy farmer, milking 500 cows twice a day at Leongatha in South Gippsland.

He said his energy costs have gone up “dramatically” – estimating costs had lifted from $20,000 per annum to more than $42,000 – despite making substantial investments on-farm to save power.

And while a portion of that is due to increased power needs due to increased milking times, Mr Moscript said about $10,000 could be attributed to the price of energy, representing a 15 to 20 per cent financial hit “across the board”.

According to the Australian Energy Regulator, average electricity prices for the first quarter of 2024 were higher than the preceding quarters, with prices ranging from $69/MWh in Tasmania to $137/MWh in Queensland. 

Domestic gas spot prices were close to 2021 levels, sitting at an average of about $12 per GJ, off the back of low summer demand.

Callum Moscript, Leongatha South, estimated his energy bills have lifted $10,000 per year. Photo: Dannika Bonser

“In a tight margin game you’ve got to look at every penny you can … we have to reinvest in our business to be profitable, say $10,000 here or $15,000 there, and that can be the difference between making and losing money,” Mr Moscript said.

“A lot of farmers are nervous, there’s a feeling of trepidation with all these factors.”

Carly van der Zwet grows a range of ornamental flowers at Maxiflora at Newhaven on Phillip Island.

She estimated overall heating input costs for two hectares of hydroponic glasshouse production, and three hectares of hydroponic shade house production, had risen by about $30,000 “because of the inflationary costs of the current energy market”.

Rathbone Wine Group chief executive Darren Rathbone said electricity and gas prices had increased across the board.

“It’s just one more expensive thing hurting us all,” Mr Rathbone said.

While the wine group has invested heavily in solar panels at its wineries – Yering Station, Mount Lange Ghiran, Xanadu and Yarrabank – he said they equalled a 25-35 per cent energy contribution to the business.

“We worked with the electricity company to lock in prices about two years ago … I’m a little worried when that contract unlocks what we’ll be faced with,” Mr Rathbone said.

The greatest users of energy at the wineries, Mr Rathbone said, was refrigeration and temperature control as part of the fermentation process.

Yering Station winery owner Darren Rathbone said the wine industry has felt the effect of expensive electricity in recent years. Picture: Tim Carrafa

Restaurants and cellar door operations also use energy, Mr Rathbone said.

“We can’t cover all our energy needs via solar, and we still need to be connected to the grid.”