4 days ago
Australians advised to prepare for significant rise in energy bills
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Australian consumers are being warned of another explosion in the cost of living, with the prices of milk, butter, and meat set to rise due to floods and drought - while power prices continue to soar. Egg prices have already surged by 18.6 per cent over the past year, and the latest natural disasters threaten to revive Australia's cost of living crisis. Last month's flooding on the NSW mid-north coast has particularly decimated dairy herds near Taree, Wingham and Gloucester.
At the other end of the weather spectrum, farmers in Victoria, South Australia , Western Australia and Tasmania are battling drought, which is pushing up the price of fodder across the country. Joe Bradley, the president of dairy farmers' group eastAUSmilk, told Daily Mail Australia a 10 per cent fall in Australian milk production was likely, as a result of the latest floods in New South Wales and Cyclone Alfred in Queensland in March. This would ultimately hit consumers, and see supermarket prices for a litre of milk climb from $1.55 to levels above $2. 'Prices of dairy and dairy products will have to go up, there's no ifs or buts,' he said. 'Milk has to go up: you can't be paying $1.50 a litre for milk, it has to be two bucks a litre minimum for home brand milk.'
Eight in 10 dairy farmers are now battling the aftermath of floods or droughts. 'We estimate that between the drought and the floods and Cyclone Alfred, there's probably 80 per cent of the dairy farmers who have been affected one way or another,' he said. 'It's got to have an impact and prices for farmers' stuff is going through the roof.' A new wave of natural disasters ultimately may prompt more farmers to quit the industry, leading to Australia importing more dairy products. 'The consumer will one day pay for all this, there's no doubt about that,' he said. 'It's just a matter of getting in now and trying to make sure that we have fresh dairy for the next generation. I can tell you, if milk keeps getting shorter, dairy products keep getting shorter, it might not be a staple diet anymore - it might be a luxury diet.'
Back in 2001, shortly after dairy deregulation, Australia's annual dairy milk production peaked at 11.3billion litres, back when Australia was home to 18.8million people. That is estimated to have fallen to 8.2billion litres, as Australia's population has grown to 27.3million. During the past two decades, the number of dairy farmers in NSW and Queensland has also plunged by 85 per cent. 'Once you go out of dairy, you don't come back; milk is getting less, Australia's population is growing,' he said. Australia has also become a net importer of butter - exposing consumers to fluctuations in global demand for the spread with less of it now made locally compared with two decades ago.
Michael Harvey, a senior dairy analyst with Rabobank, said higher global butter prices, as a result of problems like blue tongue disease affecting European cattle, could see Australians pay more for butter. 'The reality is it's a record-high butter price we've got at the moment,' he told Daily Mail Australia. 'If it remains elevated, there's a chance it will, you'll see retail prices moving higher. We actually import more butter now than we did - it's a long-run decline in milk production.' Major dairy processors like Norco, Lactalis and Saputo are publishing farmgate prices on Monday, which will determine what dairy farmers are likely to be paid for their produce at a wholesale level in the year ahead. 'Higher global prices feed through to higher retail prices,' Mr Harvey said. 'It's improving global demand, which means you get higher global prices for dairy which then put upward pressure on local prices whether it's at farmgate or in the wholesale market.'
Australian consumers have this year already been dealing with an egg shortage after an outbreak of avian influenza affected egg production in Victorian and NSW. As a result, egg prices have soared, leading to supermarkets limiting customers to two cartons, with price statistician Michelle Marquardt blaming the outbreak of avian influenza. 'While annual inflation eased for most food categories in April, egg prices were up by 18.6 per cent in the past 12 months. This comes as supply has been affected by bird flu outbreaks,' she said. Agribusiness giant Elders is also predicting an increase in beef and lamb prices, in the six months to September, as a result of drought conditions in southern Australia. This would reduce the supply of livestock 'following increased de-stocking in dry regions'.
Meanwhile, electricity price increases of somewhere between 0.5 per cent and 9.7 per cent can be expected from July 1 by customers on default market offers, the maximum retailers can charge. The Australian Energy Regulator's determinations mean NSW customers on standing offers face the steepest price growth of between 8.3 per cent to 9.7 per cent, depending on their network area. Residential customers on default plans in southeast Queensland can expect hikes of anywhere between 0.5 per cent and 3.7 per cent, while people in South Australia face rises of 2.3 per cent to 3.2 per cent. Victorian households can expect a modest one per cent average bump, following an Essential Services Commission ruling.
Prime Minister Anthony Albanese defended his government's energy policies when asked if households were bearing the financial burden of increased network costs to switch to clean energy. 'The cheapest form of new energy is renewables, backed by gas, backed by batteries and backed by hydro for firming capacity,' he told reporters. 'That is the transition that is under way. And at the election on May 3, there was the option of stopping all of that, waiting until the 2040s for the nuclear fantasy to be rolled out with costs, unknown of that.'
Deputy Liberal leader Ted O'Brien said electricity prices continued to rise despite 'constant assurances of cheaper power from the Albanese government'. 'The AER identifies high demand, network and power station outages and low renewable generation as the key drivers behind the continued rise in prices,' said the former energy spokesman. 'While the opposition acknowledges it did not meet expectations at the recent election the fundamental issues in Australia's energy market under Labor persist - prices continue to rise.' Headline inflation rose by just 2.4 per cent in the year to April but fruit and vegetable prices soared by 6.1 per cent, and prices for other major foods are in danger of also surging.
