Fonterra Warns of Export Competitiveness Risks Amid Rising Power Prices
Source: The DairyNews
Fonterra, New Zealand's leading dairy cooperative, has expressed concerns over the sharp increase in wholesale electricity prices and the ongoing uncertainty in the gas market, which are threatening the country's export competitiveness.
The surge in energy costs, driven by a doubling of wholesale electricity prices over the past three weeks and rising to over $900 per megawatt hour last Wednesday, has been exacerbated by unusually low hydro lake storage levels for this time of year, prompting warnings of significant increases in household energy bills.
Anna Palairet, Fonterra’s Chief Operating Officer, highlighted the challenges these rising costs pose to the dairy industry, particularly during the peak milk processing season. "We are concerned that the high wholesale electricity prices and uncertainty in the gas market are impacting New Zealand's export competitiveness," Palairet stated. She emphasized that while Fonterra is confident in its ability to maintain milk processing operations during the seasonal peak, the escalating energy costs are adding significant financial pressure on the cooperative and its shareholders, as operations cannot simply be paused.
Palairet also called for long-term solutions to ensure that energy remains affordable, pointing out that the current situation is unsustainable for both Fonterra and New Zealand’s broader export sector.
The impact of rising energy costs is not limited to the dairy sector. Meat processor ANZCO Foods reported a significant financial hit, with CEO Peter Conley noting that the company expects to pay double for electricity this year compared to last year. Despite this, ANZCO Foods is actively managing its electricity usage and exploring various cost-saving measures to mitigate the impact, though production has not yet been reduced.
Similarly, Alliance, another major meat processing company with seven plants across New Zealand, acknowledged the challenges posed by rising energy prices. However, the company reported that it remains unaffected by the current crisis due to long-term supply contracts that shield it from immediate price hikes.
The mounting energy crisis has triggered increasing pressure on power companies to address the situation, with calls for more resilient and cost-effective energy solutions. As New Zealand's key exporters like Fonterra and ANZCO Foods grapple with these rising costs, the broader implications for the country's export competitiveness are becoming a critical concern, underscoring the need for strategic energy management and policy interventions.
Anna Palairet, Fonterra’s Chief Operating Officer, highlighted the challenges these rising costs pose to the dairy industry, particularly during the peak milk processing season. "We are concerned that the high wholesale electricity prices and uncertainty in the gas market are impacting New Zealand's export competitiveness," Palairet stated. She emphasized that while Fonterra is confident in its ability to maintain milk processing operations during the seasonal peak, the escalating energy costs are adding significant financial pressure on the cooperative and its shareholders, as operations cannot simply be paused.
Palairet also called for long-term solutions to ensure that energy remains affordable, pointing out that the current situation is unsustainable for both Fonterra and New Zealand’s broader export sector.
The impact of rising energy costs is not limited to the dairy sector. Meat processor ANZCO Foods reported a significant financial hit, with CEO Peter Conley noting that the company expects to pay double for electricity this year compared to last year. Despite this, ANZCO Foods is actively managing its electricity usage and exploring various cost-saving measures to mitigate the impact, though production has not yet been reduced.
Similarly, Alliance, another major meat processing company with seven plants across New Zealand, acknowledged the challenges posed by rising energy prices. However, the company reported that it remains unaffected by the current crisis due to long-term supply contracts that shield it from immediate price hikes.
The mounting energy crisis has triggered increasing pressure on power companies to address the situation, with calls for more resilient and cost-effective energy solutions. As New Zealand's key exporters like Fonterra and ANZCO Foods grapple with these rising costs, the broader implications for the country's export competitiveness are becoming a critical concern, underscoring the need for strategic energy management and policy interventions.
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