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Lower gas prices a welcome boost for food and grocery manufacturers

Inje-gun, Korea – May 10, 2018: Closeup of Gas valve on a domestic LPG(Liquefied Petroleum Gas) tank at the outside of house in countryside of Korea.

The Australian Food and Grocery Council (AFGC) has welcomed the Government’s decision to apply more measures for reducing gas prices in Australia after five years of significant price increases.

On Tuesday the Liberal-National government announced that it will “help secure gas supplies, put downward pressure on prices and encourage new investment in gas supplies”.

AFGC CEO Tanya Barden said the price increase in recent years has hampered competition in the industry.

“Many food and grocery manufacturers, particularly in the meat, baked goods, dairy, confectionery and tissue products sectors, rely on natural gas to power their production systems,” Barden said.

“The significant increase in gas prices over the last five years has damaged the competitiveness of food and grocery manufacturing, particularly at a time when other input costs are also escalating.”

High gas prices also made it difficult for companies to reduce carbon emissions.

“There are companies that have sought to reduce their carbon emissions by switching from electricity or coal fired boilers and ovens to gas, or installed gas co-generation to produce cleaner electricity, yet haven’t been able to afford to run this equipment,” she added.

“If Australia is to reduce its emissions and maintain a manufacturing industry, then affordable access to gas is an essential part of the energy mix.”

The AFGC has previously encouraged governments to adopt market based mechanisms to address gas shortages and a lack of competition, but said it has been “disappointed and frustrated” that states have not taken up the opportunity to safely develop their on-shore gas reserves.

The council said that while the Government measures will assist, there is still “an urgent need for states to do their part”, to lift the moratoria ensure safety measures in gas reserves, while protecting the surrounding farmlands.

“As well as encouraging more gas supplies, we also encourage the Government to consider ways to increase competition at all stages of the gas supply chain, including retail,” Barden added.

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