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Cap gas prices, urges food and grocery manufacturing group

Manufacturing News

Industry association the Australian Food and Grocery Council has urged the country’s energy ministers to adopt “meaningful action” when they meet in Brisbane today, with members reporting energy price hikes of 300 per cent this year.

The AFGC urged a cap on gas prices, which were causing significant pain to manufacturers and making their goods uncompetitive in export markets.

“The vast majority of food and grocery manufacturers purchase gas on the retail market rather than the wholesale market and so consideration must be given to making the code of conduct governing gas supply agreements mandatory and extending it, along with price caps, to cover retail pricing,” said Tanya Barden, CEO of the AFGC, which calculates the sector’s economic value at $134 billion.

“While wholesale price caps are important, manufacturers are exposed to retail pricing and they are incurring huge increases in the cost of gas that undermine the long-term future of Australia’s largest manufacturing industry.”

The Australian Industry Group’s Performance of Manufacturing Index for November registered a big slump in the food and beverage sector, which fell  7.5 points to 47.9. A result under 50 indicates contraction.

Steve Nicholson, Director and acting CEO of The Sorbent company. Nicholson, whose company makes Sorbent toilet paper and employs 150 people in Melbourne, said his gas costs will increase 300 per cent in 2023 and electricity costs the same amount the year after – creating an “enormous cost strain” for viable local production.

Michael Perich, the CEO of food and beverage processor Noumi, said his company was currently facing “an unprecedented and unsustainable four-fold increase in our contracted gas prices.”

Picture: credit shutterstock

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