Fighting higher costs crucial

Price is critical.

The prices you pay and the prices you receive are both fundamental to financial sustainability.

When the prices paid overtake the price received, you are in big financial trouble.

Farmers know this better than anyone.

Farmers are of course the most resilient and adaptable of all business operators and many farming enterprises can ride through a few rough years so long as there are some good years to balance things out.

As price takers, not price setters, farmers are at the absolute mercy of any price increases out of their control.

Think back, not too long ago, when dairy prices went through the floor.

Some dairy producers left the industry to grow crops or red meat, others just sold up and found something else to do.

But the resilience at the core of the dairy industry shone through and they were able to survive – just.

Every single input cost increase places competitive pressure on agricultural viability.

Farming is not like retail or service industries – increases in supply chain costs are passed on in those sectors, but farming is of course not like that.

Farmers can’t just add a dollar here or a dollar there to the commodities heading out the farm gate – unfortunately, it doesn’t work like that.

TasFarmers continues to advocate on the unrelenting increases in municipal rates and its direct negative impact on farming bottom lines. Electricity costs march ever upwards in lockstep with increased network charges, which again, impact on farming bottom lines and the capacity to turn a dollar.

Registration costs on farm vehicles continue upwards and other essential farm inputs rarely if ever drop in price, and if they do, it’s not for long.

 Tasmanian processors are also at the mercy of increasing costs.

Labour costs, energy network costs, freight costs, storage costs, increases in rates and charges, environment levies and so on all work against the viability of agricultural manufacturing in this state.

The unfortunate reality is that Tasmania competes against the rest of the world and once the price of our finished products becomes uncompetitive, the intense pressure will fall on processors to justify their Tasmanian presence to their international owners.

This is why it is critical that the state governmentowned companies and business enterprises must end this relentless upward rise in prices.

It is easy for those sitting around the board or council table to increase prices – it is harder to drive efficiencies in those organisations so that prices do not rise, but it must and should be done. 

Every time an input cost rises without any sort of offset, Tasmania gets closer to losing farmers and downstream processors. 

International competition is intense, and they will take our market share in the blink of an eye – our volumes are almost rounding errors compared to the size of some international producers of vegetables and other commodities.

Farmers should quite rightly demand that stateowned companies like TasNetworks, Tas Irrigation and local government should completely exhaust all avenues for efficiency and internal costcutting before even considering raising prices. 

The future of viable farming depends upon it.