CEO COMMENT

PRICE COST SQUEEZE AND HARSH REALITY

By Dan Galligan, CEO CANEGROWERS

The impact of the 1 July regulated electricity price determination (2022- 23) by the Queensland Competition Authority (QCA) will be an awful reality for all irrigators in the state.

After a couple of years of easing in the year-on-year price increase, this year we see increases of up to 15% for small users and more than double that for large customers (see page 6 for more details).

The QCA determination was released in the same week as the national energy market effectively imploded.

It’s tempting to look with dismay at the way Australian governments have positioned us to be paying more for energy than any of our global competitors. Essentially, the Australia energy system is gradually killing off any industry that relies upon it. If we are not smart, irrigated agriculture may well be the next victim.

In many parts of Australia, irrigators are forced to move to high value cropping systems in order to justify the cost of irrigation. However, even for high value irrigated horticulture there is a price point at which the numbers will not stack up.

CANEGROWERS, as part of the Queensland and National farmers federations, and with connections with all national irrigation industries, has been at the forefront of providing solutions to bring about reform of the policy, pricing and tariff structures in the electricity system.

Our objective on pricing has been to see affordable tariffs which would have a ceiling of 8cents/kwh for the retail (R) component and a ceiling of 8c/kwh for the network (N), and in general see greater flexibility in tariffs along with regional retail competition.

Over recent years, with the release of demand-based tariffs, we have come close to this price objective. But so much more needs to be done to keep ahead of price increases.

For many irrigators, the best thing that can be done is to 'get off the grid'. In partnership with QFF over the past six years, we have seen many irrigators access the energy savers program to fund energy audits and seek assistance to implement energy saving technologies on their farms.

This has been an enormously successful program and we are now working hard to see funding continue either from the State or Federal government.

Finally, with pricing, tariff and energy saving initiatives continuing, we are also working hard with growers through our Business Essentials workshops to assist growers to drill into their costs of production to put all costs into perspective. We need to really understand the cost price tradeoff that is the key to driving productivity and profit for each farm.

In the end, we understand the vicious impact of escalating input costs. Easy answers don’t exist as this relationship between energy, water and input costs require clever thinking and specific tools.

CANEGROWERS will only see this pricing determination as further justification and impetus for the work we have been doing. We will continue to do everything we can to assist all growers to maintain their position as some of the world’s most efficient and sustainable producers. •