Processors call for Govt to deliver certainty around energy costs

Beef Central, 07/09/2017

Meat processors across the country are feeling the effects of rising energy prices, which are impacting shifts, employment levels and livestock purchase numbers, according to the Australian Meat Industry Council.

AMIC has been meeting in Canberra this week with government, opposition and crossbench MPs and Senators, calling for the development of rules for investment and charges in the energy market.

AMIC CEO Patrick Hutchinson said new rules are needed to give meat processors certainty within the market.

The red meat processing sector is as Australia’s largest trade-exposed manufacturing sector.

Processors are faced with a significant burden when energy costs, whether electricity, gas, coal, diesel or otherwise, increase.

“Rising energy prices can cause multiplier effects. Processors reduce shifts, impacting on employment levels, which in turn impacts on livestock purchase numbers,” Mr Hutchinson said.

“Effects felt at the company level then impact on employees and in turn impacts up and down the supply chain, from livestock producers through to consumers.

“Australian Governments must come together work to reduce these impacts”.

Mr Hutchinson said AMIC members have become increasingly concerned with the level of uncertainty in the regulatory environment in Australia’s energy sector.

“The current structure is not conducive to investment in infrastructure to ensure a secure, reliable and affordable supply of energy to businesses and consumers,” he said.

“AMIC members have had to make investments in technologies to reduce their reliance on external sources of energy, such as installation of solar panels, upgrades to refrigeration facilities, steam recovery systems, heat exchangers, and use of biogas.

“However, these are expensive capital projects with a long payback period that could otherwise be invested in improvements and efficiencies in other areas of the business.

Mr Hutchinson told MPs and Senators that the current structure of the retail energy market is not conducive to maintaining energy costs at a level comparable with inflation.

“AMIC members report being able to get quotes for gas from only one retailer, at prices 75-100% higher than previous contracts”, stated Mr Hutchinson.

“Further, usage conditions can also be placed on these contracts, whereby a minimum volume must be met, otherwise the processor has to pay up to the equivalent volume in any case.”

AMIC members believe the solution lies in the development of rules for the provision of, and investment in, energy supply.

“The red meat processing industry needs to have certainty within the market,” Mr Hutchinson said.

“This can only be done through a bipartisan approach to development of rules for investment and charges in the energy market.”

Source: AMIC





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