Food and grocery manufacturers embrace lower gas prices

The Australian Food and Grocery Council (AFGC) has welcomed government’s announcement that it will introduce a range of measures aimed at reducing gas prices following discussions with Centre Alliance.

AFGC CEO Tanya Barden says the significant price hikes over the past five years have damaged the competitiveness of food and grocery manufacturing, particularly at a time when other input costs are also escalating.

She adds that many food and grocery manufacturers, particularly in the meat, baked goods, dairy, confectionery and tissue products sectors, rely on natural gas to power their production systems.

High gas prices make for higher carbon emissions

“High gas prices also made it difficult for companies to reduce carbon emissions,” she said.

“There are companies that have sought to reduce their carbon emissions by switching from electricity or coal fired boilers and ovens to gas, or installed gas co-generation to produce cleaner electricity, yet haven’t been able to afford to run this equipment.”

She says that in the US gas development has contributed to lower carbon emissions and the resurgence of manufacturing while in Australia the opposite has taken place.

“If Australia is to reduce its emissions and maintain a manufacturing industry, then affordable access to gas is an essential part of the energy mix.”

Market-based mechanisms to address gas shortages

The AFGC has previously encouraged governments to adopt market-based mechanisms to address gas shortages and a lack of competition, but said it has been “disappointed and frustrated” that states have not taken up the opportunity to safely develop their on-shore gas reserves.

The council said that while the government measures will assist, there is still “an urgent need for states to do their part”, to lift the moratoria ensure safety measures in gas reserves, while protecting the surrounding farmlands.

“As well as encouraging more gas supplies, we also encourage the government to consider ways to increase competition at all stages of the gas supply chain, including retail,” Ms Barden added.

The Liberal-National government recently announced that it will assist secure gas supplies, put downward pressure on prices and encourage new investment in gas supplies.

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