Between the producers of raw materials and the end-consumer, all areas of the supply chain are being hit by rising fuel prices, often at double-figure rates.
This is happening as lawmakers ponder the future of Australia’s energy grid, with costly renewables taking the place of coal on the agenda.
Australian Competition and Consumer Commission chairman Rod Sims has been scathing about the effects of generation costs on driving up prices.
“On any measure, it is clear that electricity prices in Australia have gone from a source of competitive advantage to a drain on business productivity and a serious affordability concern for households,’’ he said.
Indeed, a new survey by Roy Morgan Research places the so-called “energy crisis” as the biggest single issue for Australian shoppers, who give the issue roughly double the importance on the domestic agenda as old staples like unemployment and trust in politicians.
The fact that they have been seeing their fuel bills go through the roof means in turn that they face having to readjust their weekly shops to balance domestic budgets, to the detriment of food and beverage manufacturers who face similarly mounting cost issues.
This risk that Australians will be forced to tighten their belts, even despite the country going through a period of positive growth, was echoed last week by the Energy Users’ Association of Australia chief executive Andrew Richards, who said that the plight of big energy users would end up hitting mums and dads.
“A lot of our members who are in the food industry will start having to pass the costs on and that will lead to an increasing cost of food and other consumables on supermarket shelves,” he said.
In the meantime, the food and beverage industry’s apex body, has raised concerns that thousands of jobs will flee to other countries.
"Businesses at the moment are facing a profit squeeze. They're going to have to consider whether or not they retain their jobs and investments here or whether they look to move offshore," said Tanya Barden, chief executive of the Australian Food and Grocery Council last month.
"I think absolutely there's the potential for thousands of job losses in food and grocery manufacturing, and also a loss of investment, which is a loss of capability to be able to otherwise grow into export markets and the like.”
Canberra doesn’t seem to be making much headway in finding a solution to the rising fuel prices. Indeed, lawmakers seem to be focusing on ways to out-green one another.
Instead, the onus appears to be on suppliers and manufacturers to economise their way out of the situation.
There are few better ways to bring in economies than by reusing materials — and the sun’s rays — at least for suppliers.
One milk company has bought a 7-hectare site in the Goulburn Valley that will be fuelled by gas from a bio-digester and solar cells.
The former cheese factory, now operated by Australian Consolidated Milk, will be the first in Australia to process organic and conventional milk simultaneously into cheese, butter and powder.
The site will open next door to a bio-digester, which will turn food waste into bio-gas for energy. The company is also looking at solar energy, alongside traditional energy sources.
“It’s a hybrid model where we can access alternative energy at the same time,” said managing director Michael Auld.
“The blend reduces volatility and the cost of energy.”
High fuel costs have also been putting pressure on businesses that require irrigation, forcing some to invest in their own on-farm renewables.
In Queensland and northern New South Wales, some sugar mills are making electricity by burning sugarcane waste as a biomass energy source. Other plants in Victoria, like Warrnambool Butter & Cheese, are using whey to produce bio-gas, thus reducing their spending on natural gas.
The agricultural sector should be aiming to close the loop, and reclassify waste as a resource, argue University of Southern Queensland academics Bernadette McCabe and Craig Baillie.
“Turning trash into treasure is a step towards energy independence, an idea that is gaining momentum overseas. An energy-independent farm seeks to cater for its own energy needs, creating a self-sustaining environment that buffers against fluctuating energy prices,” they say.
“Australian farms should largely be able to achieve this. The trend towards renewable energy sources, and equipment that can run on bio-fuels, demonstrates an appetite for sensible, sustainable technology.”
In this regard, Western Australia’s biggest pork producer, Westpork, is about to add wind power and battery storage to its existing solar arrays, and possibly bio-gas too, as part of a plan to go 100% renewable energy and slash production costs.
Auditing and data mining are among the most basic strategies food companies can turn to as they look to cut their production costs.
The storage and analysis of Cloud-stored big data is fast becoming central to processing operations across Australia, with computers constantly analysing for ways to boost the efficiency of equipment.
For Victoria-based Simplot, one of Australia’s best-known food manufacturers, “integrating lean processes” has been helping to reduce energy costs.
Its head of innovation, Carmen Gilles, said the company has created a framework for continuous development and sustainability.
“It’s a system where we can audit all of our sites to find where the gaps are and that helps us generate our plans,” she added.
But Brett Wiskar, R&D director at factory operator Wiley, warns that simple tweaks identified through auditing to find production efficiencies will not always work.
“Just because a change in the production process might reduce energy consumption doesn’t mean savings are scalable with continued long-term positive impacts,” he said.
Instead, capital expenditure on expensive but efficient new equipment will often have a positive long-term impact on energy usage.
“Exploring energy cost reduction through innovation is rarely a waste of time,” Wiskar added.