Kagome power up $1.4m to massive $3.6m a year
Summary: KAGOME’s gas prices have skyrocketed by $1.4 million to a staggering $3.6 million this year.....
And with total energy costs to rise by $2.1 million, the future of the business is in doubt, according to chief executive Jason Fritsch.
As well as this year’s price rise, the tomato processor, which employs 210 fulltime staff in Echuca, will see a $100,000 rise in gas prices for the 2018 season.
‘‘In addition to this, we have secured electricity for 2018 with an associated increase in cost of about $600,000 compared to the prior year,’’ Mr Fritsch said.
‘‘The total energy cost increase for 2018 compared to 2016 will be in excess of $2.1 million, with little or no alternative to alleviate cost increases by passing onto our customers.
‘‘These cost increases call into question the long term viability of our business, with little appetite to reinvest in the business in the short to mid-term.’’
Mr Fritsch said until recently, food and dairy manufacturers had been able to access competitively priced energy supply (gas and electricity) that contributed significantly to the long-term sustainability of business.
‘‘In the past 12 months, this has changed with price increases of 50-100 per cent as future supply continues to fall short of demand,’’ he said.
‘‘Kagome, like many other manufacturers, will continue to review all input costs, including staffing levels to try and remain competitive in the market place.’’
Member for Murray Plains Peter Walsh said these energy rises were not small and they meant running cooling systems, irrigation and processing machinery was costing more than ever before.
‘‘But at the same time as costs are increasing, Victorians are facing a far higher risk of blackouts,’’ he said.
‘‘The Australian Energy Market Operator predicts that declining gas production may begin to affect electricity supply in Victoria, SA and NSW as early as summer next year.
‘‘And the Andrews Labor Government’s failure to stop the closure of Hazelwood Power Station cut 22 per cent of our state’s baseload power, with nothing to fill the gap. It’s time to take a different approach.
‘‘Daniel Andrews needs to stop playing politics with Victoria’s gas supply and energy affordability.’’
Mr Walsh said the Liberal Nationals recently announced their onshore gas policy, which would provide cheaper gas and create more jobs while protecting the environment and farmland.
‘‘Our policy keeps Victoria’s fracking ban while securing the gas resources we need,’’ he said.
‘‘A Liberal Nationals government will legislate to allow onshore conventional gas exploration and production in Victoria on a case-by-case basis.
‘‘We would introduce Victoria’s first royalty sharing scheme for landowners, with landholders entitled to a 10 per cent share of the royalties paid to government.’’