“That’s probably one of the two main costs of the three inputs for our [horticulture] producers,” Ms. Simson said.
“[Then] in the processing sector, for every dollar spent on the farm, there is a dollar spent on electricity.
“This not only means that input prices are rising, but also pressure on the price at the farm gate.”
A typical dairy farmer spends between $200,000 and $250,000 a year on electricity, according to the NFF. In large intensive horticultural farms, this figure is in the millions.
Austrade estimates the combined cost of fertilizer and fuel for growing equipment at 21.6% of their total cash costs. For sheep, dairy and cattle farmers, it represents 12.9, 9.5 and 7.5 percent respectively.
Ms Simson warned this meant a national or global energy crisis would have ‘significant flow effects on food and fiber production’ and exacerbate existing pressure from skills shortages and the ‘spiraling’ cost of inputs such than fertilizers.
The average price of Australian fertilizer imports increased by 128% last year to $867 per tonne, and this trend has continued in 2022.
Ms Simson said the energy crisis would further affect the availability and cost of fertilizers as they were “extremely energy intensive” to manufacture. She predicted that crop yields would “immediately” drop by up to 30% without synthetic fertilizers.
Mr Watt, who was sworn into the Albanian ministry last week, said minimizing the impact of the energy crisis on the agricultural sector was a key “short-term priority” in his new role.
“This is a significant and growing problem for farmers. There are cost increases that are happening in the sector because of the energy crisis, and this affects things like the availability of fertilizers, which obviously puts a lot of pressure on [producers].
“This is something that I will work closely with, engaging closely with the sector and seeking ministerial advice, as well as working closely with Chris [Bowen].”
Mr Watt said industry groups and individual farmers had already raised their concerns with him, but there was no easy solution.
This latest cost pain follows Rabobank’s warning last month that the impact of the Russian-Ukrainian war on crops and infrastructure would lead to restricted grain supplies – and therefore higher prices – for “years to come”, while Austrade said the war would put pressure on food prices globally.