Electricity hikes another burden for farmers

The new financial year is just over a month old, but far from receiving many happy returns, Queensland farmers will be facing significantly higher electricity bills.
On July 1, the Benchmark Retail Cost Index increased 13 percent, as per a determination from the Queensland Competition Authority (QCA).
In anyone’s book, a 13pc increase is a big impost to carry, but considering the reliance that intensive agriculture has upon electricity these costs will place a significant burden on our farmers.
In the sugar industry, electricity represents about 25 percent of costs, while other industries such as dairy, cotton, chickens, nurseries, and horticulture are all also heavily reliant on power to run their sheds, pumps, and other gear.
Likewise, irrigation schemes are highly reliant on electricity, which is another escalating cost that may worsen once the QCA announces its determination on SunWater water prices next year.
As I write this, the major political parties have gone into an apparent state of hibernation with climate change policy; they are making noises, but it may be after the election that we see what they intend to implement.
At this stage, the Carbon Pollution Reduction Scheme (CPRS) looks like it will remain on the shelf for a few more years, and meanwhile there will be a greater emphasis on policies such as energy efficiency and renewable energy.
For Queensland farmers, I doubt they would be excited about either.
The free home insulation program did not ingratiate itself with the public, and we already have a Mandatory Renewable Energy Target (MRET) to increase renewable electricity to 20 percent by 2020.
Effectively, the MRET gives a leg-up to more expensive forms of green-field electricity, such as wind and solar, by legislating a portion of the nation’s energy to come from these sources.
While some of this electricity will arrive from sensible projects such as the cogeneration facility attached to Mackay Sugar’s Racecourse sugar mill, others simply represent very expensive forms of power.
Equally having a discussion about energy generation is plain silly if some leadership is not shown to also start a mature conversation about nuclear generation.
There is still a hang-up about incidents that happened decades ago, when in reality the newer generation systems would appear to be safe, and don’t necessarily have to be put in peoples’ backyards.
For the voters in inner-city Brisbane, they probably like the idea of a government subsidy for wind farms or solar facilities.
But are these people fully aware of what this may mean to not just their power bills, but also the costs that would come upon everything in their fridge and pantry?
Already we can choose to see compartmentalised within our electricity bills – our bills can detail the price component of green electricity.
Paying more for electricity is one thing, but are people in the cities willing to recognise those costs when it comes to a litre of milk or a bunch of bananas?
There is a strong argument that if the consumer wants to pay more for green electricity, then he or she should be willing to do the same for the impacts this will have on the agricultural sector.
Alas, putting a price on the rising green energy costs with food seems much more difficult than it is for electricity.
The electricity companies have the benefit of having an independent arbitrator that can step in for them and increase the retail price.
Whenever the costs increase – via, for example, mandated green energy or perhaps inefficient company structures – the Competition Authority can increase the prices the electricity companies can charge.
It does not give the electricity providers an incentive to be efficient when a cost increase could eventually be factored in to future price hikes.
Farmers can’t do the same with the price of a green farming policy, or in fact with any of their costs. There is no independent authority that can step in and increase farm commodity prices when the cost of fertiliser goes through the roof, or when electricity prices jump 13pc.
If a dairy farmer tried to charge 10pc more for his milk because of the green practices on his farm, I could image the reaction from the big retailers.