Who is going to pay?

We are starting to see the effects of the Russian – Ukraine conflict with fuel prices crashing through the $2 per litre barrier. Australia’s 26 million people use about 34 billion litres of fuel each year or about 1,300 litres per person. Based on the fuel price increases we have seen since last year, that’s an increase of about $1,000 per person.

While that sounds bad enough, that’s assuming that costs incurred by primary producers, transport and other businesses can be passed onto consumers.

Unfortunately getting markets to work in an open fashion is nearly always more hope than reality. It’s an undeniable fact that Governments of all persuasions want cheap food for the population.  If too much is spent on food, it simply does not leave enough for discretionary spending and for Governments to tax us in some other way.

It is highly unlikely that the Australian Competition & Consumer Commission (ACCC) will make any decision that has an adverse effect on consumers.

If fuel was the only commodity that was increasing in price, it might be bearable, but this comes on top of fertiliser, chemicals and steel reaching extraordinary prices. Agricultural industries are still recovering from multiple drought years only to be hit with horrific flooding this year.

The latest figures from the Queensland Dairy Accounting Scheme (QDAS) show that the average QDAS farm spent $60,000 last year on fertiliser and fuel. That figure will at least double this year.  The biggest impact on dairy costs might still be coming with upward pressure on grain markets already seen this month.

What happens in Ukraine this month is extremely critical for grain prices. The Autumn planted wheat should be fertilised now for a June harvest and the Spring planting should be near completion. How much of that is actually getting done is anyone’s guess.

As bad as this situation is, it’s also an opportune time with a federal election looming for our dairy advocacy groups to ask the question of our political leaders and everyone in the dairy supply chain – “are you prepared to pay a sustainable price for high quality Australian grown produce? “

“Well, are you?”

Ross McInnes – District Councillor eastAUSmilk