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Dairy Connect calls for Royal Commission into electricity prices

  • By: "Prime" Ag News
  • Jul 14, 2018

Advocacy group Dairy Connect today added its voice to a growing national chorus calling for a Royal Commission into electricity prices and contractual relationships. This is particularly so between dairy farmers and energy retailers.

CEO Shaughn Morgan said sky-rocketing electricity costs have meant that Australia was losing international competitiveness for agricultural products and this had hit dairy and irrigation farmers hardest.

“The impact is particularly severe on irrigated dairying that needs to pump water to grow fodder crops as well as keeping fresh nutritious milk cool,” he said.

“This is market failure.”

The impact of energy prices was analysed closely in a dairy farm energy cost case-study that formed part of an Australia Consumer and Competition Commission report.

“The ACCC report clearly enumerated how dairy farmers were paying twice for energy cost hikes.

“They pay once at the dairy shed and again at the farm gate in the form of price cuts for their fresh nutritious milk.”

Electricity and gas accounted for a significant proportion of costs of dairy production, Shaughn Morgan said.

Peak industry body Dairy Australia has estimated that the total cost of energy for dairy processors was about $160 million a year.

The dairy industry ‘market failure’ argument was supported by Cameron Quin, the national business director of commercial solar operator Solar Bay.

He said Solar Bay had been working as an ‘honest broker’ for dairy farmers in unravelling complex commercial transactions between producers and energy retailers.

“Quite often debts claimed for energy consumption are just plain wrong and dramatically overblown,” he said.

“We’ve found some number of dairy farmers who had not received an energy bill for around six months and, when a bill did arrive, it could be up to three times the relevant network tariff.”

“One producer paid an incorrect embedded network tariff bill for $7000, an amount that still hasn’t been repaid.

“Retailers make it really difficult with some of the world’s most complex invoice and anti-competitive clauses.”

“A key problem is that dairy producers are, more often than not, far too busy to take the time to try to analyse and understand indecipherable and incorrect invoices and anti-competitive contracts.”

“You need to go through a full program to understand energy bills landing on the farm desk”, Cameron said.