{"id":13511,"date":"2017-04-18T19:20:13","date_gmt":"2017-04-18T09:20:13","guid":{"rendered":"https:\/\/www.machines4u.com.au\/mag\/?p=13511"},"modified":"2017-04-18T19:21:00","modified_gmt":"2017-04-18T09:21:00","slug":"possible-solutions-energy-crisis-farmers","status":"publish","type":"post","link":"https:\/\/www.machines4u.com.au\/mag\/possible-solutions-energy-crisis-farmers\/","title":{"rendered":"Possible Solutions to the Energy Crisis For Farmers"},"content":{"rendered":"

Imagine a game of Monopoly with four players. Two have gradually come to own all the expensive properties. The others have just enough leverage to keep making it round the board for their meagre go-passing paycheques. But the majority of their funds are funnelled into the laps of the two big players.<\/p>\n

It’s the kind of game you would want to do this to:<\/p>\n

\"desk<\/p>\n

But, for many Australian farmers, this is just\u00a0life.\u00a0They are the players in the middle. The two giants squeezing them: electricity distributors\u00a0and supermarkets.<\/p>\n

The rising cost of power<\/h2>\n

Through social media and news outlets, more and more farmers are coming forward with examples of their ballooning electricity bills. The consensus seems to be that bills have doubled over the last two years. Compounding this issue is the fact that other businesses the farmers deal with are also suffering from the power price hikes and the charges are passed on down the line.<\/p>\n

The Central Irrigation Trust, for example, is now looking at a $4 million power bill. The Trust supplies 1600 irrigators and manager, Greg McCarron, explained there’s no way they can’t pass on some of this extra cost to farmers. Electricity comprises 40% of their operational costs so to not do so would be financial suicide.\u00a0However, McCarron is\u00a0concerned about the effect this, and the rising costs of electricity generally, is having on farmers.<\/p>\n

\u201cThose people we supply operate in domestic and international markets against people who don\u2019t face the same costs. The rising cost of power affects their business, their families and their region.”<\/p><\/blockquote>\n

Lee McKenzie, a dairy farmer from the Mount Compass dairy region, told The Adelaide Advertisier he will no longer be able to continue with his business if the\u00a0costs of power and irrigation continue to rise.<\/p>\n

\u201cThe high cost of energy is a significant factor in cutting production on dairy farms because the people I know are all cutting back. For us it will be the nail in the coffin to give up farming.\u201d<\/p><\/blockquote>\n

Ergon currently has a proposal before the Australian Energy Regulator (AER) for a new tariff structure that, if approved, will see electricity prices go up yet again<\/a>. While companies like the Central Irrigation Trust\u00a0are able to pass on some of the costs to their consumers, many farmers are unable to do the same.\u00a0CEO of the New National Irrigators Council, Steve Whan, explained:<\/p>\n

“They can’t go to the big supermarket chains and say ‘hey, our electricity costs have gone up, we’d like you to pay a bit more for your fruit and veg’. They’re effectively price takers. So it’s another thing that puts the economics of being in business on a farm at risk.”<\/p><\/blockquote>\n

Supermarkets: the other side of the squeeze<\/h2>\n

More than just a fun word to say, “oligopoly” describes a market with limited competition, dominated by a couple of big players. When it comes to Aussie supermarkets, two major chains have such a profound\u00a0grip on the market it is almost more accurate to call it a duopoly.<\/p>\n

The two ubiquitous brands dominating the scene are, quite obviously, Coles and Woolworths. And economists describe their presence\u00a0as one of the most severe concentrations of power in the world. While ALDI is growing, it still only accounts for around 10% of the market share. Meanwhile, between them, Coles and Woolworths take up 80%.<\/p>\n

According to a Four Corners report, Australia has more supermarkets per capita than the US and the UK. But the vast majority of these are just the two big brands: Coles and Woolworths. Their oligopolistic hold on the industry gives them an inordinate amount of\u00a0power.<\/p>\n

Coles is actually owned by Wesfarmers who have an astounding number of brands under their umbrella.<\/p>\n

What does Wesfarmers own?<\/h4>\n
    \n
  • Coles;<\/li>\n
  • Coles express;<\/li>\n
  • Vintage Cellars;<\/li>\n
  • First Choice Liquor;<\/li>\n
  • Liquorland;<\/li>\n
  • Bi-Lo;<\/li>\n
  • Coles financial services;<\/li>\n
  • Spirit Hotels;<\/li>\n
  • Bunnings;<\/li>\n
  • Homebase;<\/li>\n
  • K-mart;<\/li>\n
  • Target;<\/li>\n
  • Officeworks;<\/li>\n
  • Wesfarmers Chemicals, Energy & Fertilisers;<\/li>\n
  • Workwear group;<\/li>\n
  • Coregas;<\/li>\n
  • Blackwoods;<\/li>\n
  • Quadrant Energy;<\/li>\n
  • And a host of other businesses and industrials.<\/li>\n<\/ul>\n

    What does Woolworths own?<\/h4>\n
      \n
    • Woolworths supermarkets;<\/li>\n
    • Countdown;<\/li>\n
    • Thomas Dux;<\/li>\n
    • Caltex Woolworths;<\/li>\n
    • Woolworths money;<\/li>\n
    • Dan Murphy’s;<\/li>\n
    • BWS;<\/li>\n
    • Cellarmasters;<\/li>\n
    • Langton’s;<\/li>\n
    • Big W;<\/li>\n
    • EziBuy;<\/li>\n
    • ALH Group.<\/li>\n<\/ul>\n

      Australia is operating under an illusion of choice. While the costs of production increase, the supermarkets won’t accept higher prices from farmers and, with no-one else to go to, they have little choice but to comply.<\/p>\n