According to the Australian government, electricity and gas prices for manufacturing businesses “have increased sharply in recent years and indications are that prices will continue to increase”.
This is something AMIC wants local and national government to address, claiming the rising costs of running meat processing plants cannot be absorbed without a harmful knock-on effect.
“Rising energy prices can cause multiplier effects. Processors reduce shifts, impacting on employment levels, which in turn impacts on livestock purchase numbers,” said Patrick Hutchinson, AMIC CEO, in a press statement.
“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 to reduce these impacts.”
Energy policy concern
He added red meat processors were faced with a “significant burden” when energy costs – be that electricity, gas, coal, diesel or renewable – increased.
Executives from AMIC held meetings with politicians from across the political divide in Canberra, Australia’s capital city, this week. Top of the agenda was the impact of energy policy on meat processors.
There is said to be growing uncertainty within the industry toward the country’s policy on energy regulation, which many feel is in need of reform. AMIC went as far to say that its members have become “increasingly concerned” as energy prices continue to rise substantially.
In the 10 years to June 2013, electricity and gas prices for manufacturing businesses have increased by 60% and 29% respectively, according to the Australian government.
Investment in energy
Privatisation of state government-owned electricity networks and retail price deregulation have been rolled out by politicians to keep price rises in check. AMIC, though, still believes the state of the retail energy market means energy costs are not at a level comparable to inflation.
“[Our members] get quotes for gas from only one retailer, at prices 75-100% higher than previous contracts,” said Hutchinson, who added: “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 said the solution to stopping burdensome price rises rested in reforming policy around the supply of, and investment in, energy.
“The red meat processing industry needs to have certainty within the market. This can only be done through a bipartisan approach to development of rules for investment and charges in the energy market.”