Costs kill

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By Dwain Duxson - An Ag Enthusiast

Costs kill - We are entering a world where things as we know them may not be the same as they once were. Costs are killing off businesses and will eventually kill some industries, and this has a profound effect on communities. This is evident on King Island.

A local Farmer sent me this: "In response to your article on the closure of King Island Dairy. Not only was it a huge blow to the dedicated and skilled workforce, but a huge blow to the rest of the Island and the remaining industry. The biggest industry on the Island is Beef Farming. Approx 22% of Tasmania's Cattle herd is on the Island. Sheep used to be big, along with Dairy. The demise of these two industries in recent years can largely be attributed to the rising costs of freight and the port calls of the ships supplying King Island".

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King Island is renowned for its Prime Agricultural Land, its clean air and its Island advantages. So, for the Agricultural goods they produce, they need to get a premium over Tassie or Mainland prices to stay viable because of their cost base. But not many want to pay a premium. So they have no way of recouping those extra freight costs (it was 3% of total Farm costs, now it's 25%).

As the headline says, costs kill, and when they start eating away at the bottom line like never before, then you have a problem. In the commodity markets, you just can't pass on any costs like others can. Do you have an example of an industry that is getting eaten by costs? Reply to dwaind@farmtender.com.au

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