Thursday, 09 February 2017 14:41

Gas price could lower future farmer returns

Written by  Rick Bayne and Madeleine Brennan

Processors are claiming Victoria’s dairy farmers could be left out of pocket because of increased gas prices in 2018.

In a submission to the ACCC, Saputo’s Warrnambool Cheese and Butter has warned that the cost of gas for its Allansford plant will increase by 50 per cent from 2018.

“This will in turn negatively impact the milk price paid to suppliers,” the submission states.

However, the Victorian Government has rejected the claim, saying the WCB argument ”doesn’t stack up”.

Warrnambool Cheese and Butter said it expected the gas price to rise because of “government policy restricting gas exploration”.

Saputo Company Secretary, Paul Moloney, said Warrnambool Cheese and Butter had no further comment on the submission, which also raises concerns about the cost of power and water and the impact of government policy.

“A sustainable, affordable and consistent supply of both water and power is required for the industry to maintain the current level of production,” it states. “Recent government policy in regard to these resources has significantly increased the cost of power and added a level of volatility to the water market which intensified the cost-price squeeze on farm businesses. Clear, balanced and consistent policy is required in this area for the industry to prosper and to foster an environment that will permit growth.”

Minister for Minister for Agriculture Jaala Pulford said the Andrews Labor Government was protecting the ‘clean, green’ reputation of Victoria’s agriculture sector.

“Our farmers produce some of the world’s cleanest and freshest food. We won’t put that at risk with fracking,” Ms Pulford said.

“There are no proved or probable reserves of commercial onshore gas and so this argument simply doesn't stack up.”

She said there had been numerous exploration permits issued in Victoria, particularly over the last 10 years.

The Labor Government says it is also reforming the gas market to improve competition and reduce prices.

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