Soaring energy bills and pricing pressure from supermarket chains could force food and grocery manufacturers to close plants and shift offshore, says the new chief executive of the sector’s peak body.
Australian Food and Grocery Council chief executive Tanya Barden says more domestic food and grocery suppliers will become unviable if they cannot pass on rising input costs or are forced to cut prices further as energy bills double.
“We’ve seen price deflation for the last six years and that’s continuing – the industry has managed to stay fairly resilient through that time,” Ms Barden told The Australian Financial Review.
“At the same time we’re seeing rapidly rising input costs, particularly around energy, where businesses are seeing a doubling and tripling of their energy bills.
“In some situations companies are having to think about whether or not they’ll be viable in the next 18 months. So there’s a risk of potentially losing some Australian manufacturing to offshore.”
Via the AFR:
East coast gas buyers say the federal government is likely to trigger its new powers to limit LNG exports at the earliest opportunity to help bring an end to a situation that Australian Industry Group describes as “disastrous” for manufacturers.
…”We strongly expect that the ADGSM will be invoked for 2018 unless there is a material change in the gas market crisis,” Mr Willox told The Australian Financial Review.
“The LNG industry still has time to rebalance the domestic gas market and avert the ADGSM. But Ai Group’s members are not yet seeing any sign of a change in the gas market.”
Competition czar Rod Sims, who will help advise Senator Canavan on whether a “shortfall” exists for 2018, said the regulator was hearing first-hand about the problems in the market but could only form its final view after getting access to private company information.
“We’re hearing …that users are still struggling to get many offers and are still facing very fixed, very rigid terms and often at quite high prices,” Mr Sims said.
Mr Willox said that retail contracts for industrial gas supply on the east coast remain “thin on the ground” and prices offered are often $17 a gigajoule or more, treble the cost of expiring contracts.
Cocked it up again. It’s an emergency mechanism being deployed in seven months. We know spot gas prices are still insane:
Spot markets are no better, still trading at big premiums to the same gas in Japan:
Why does it take six months to clarify this? Gas consumers will throw their data at the ACCC if asked.
Meanwhile, Australia’s food bowl to Asia dream goes up in smoke:
It’s the shock we didn’t need and didn’t have to have.
