They are concerned increased energy prices will not only hit their own businesses, but also be indirectly passed on to them by processors – also being hit by increased prices – paying less for milk as a result.
The Wannon branch of the United Dairyfarmers of Victoria (UDV) will host a dinner meeting on November 20 in Warrnambool to discuss the impact of high energy costs.
Lower milk prices
Farmers are being warned an extra A$3,760 (US$2,870) could be added to their average A$18,800 (US$14,360) power bills this year.
With processors’ energy costs set to rise by 50-70% in 2017-18, the fear is this could lead to lower farmgate milk prices.
UDV Wannon branch honorary secretary Chris O’Keefe said power pricing and reliability were big issues for dairy farmers and other energy-using businesses.
“The impact of high energy costs is one of the many cost squeezes on farmers, especially while milk prices have been low,” O’Keefe said.
“Farmers can’t pass on the costs to anyone else.”
Dairy Australia manager of policy strategy Claire Miller said Victoria’s dairy farmers may be up to A$57.7m (US$44.1m) worse off on farmgate prices because companies will face an additional A$100m (US$76.4m) in energy costs.
“This is around 1c per liter less that companies can pay farmers, an average A$14,840 (US$11,340) per farm,” Miller said.
Dairy farmers in other states are facing 20% higher on-farm costs. Miller said if this flowed through to Victoria it would add A$3,760 (US$2,870) to farmers’ power bills.
O’Keefe said infrastructure, as well as cost, holds the regions farms back.
“There would be a lot more development in expanding farms and other businesses if we had more reliable and cheaper power,” he said.