Peak industry body, the Australian Food and Grocery Council (AFGC) has told the Federal Government that restrictions on coal-seam gas developments in NSW and Victoria could cost the food industry $170m per year in increased gas prices.
The AFGC say that a gas spike in the next two years could also see jobs sent offshore and profits cut by 4.33 percent within the sector – potentially having the same impact on the industry as the carbon tax, The Australian reports.
The price increase will allegedly be caused by the opening up of the east coast gas market for export at the same time as restrictions on new coal-seam gas developments constrain growth.
The AFGC say that price for wholesale gas could double, causing major strain on the manufacturing sector which has faced several challenges over the past few years including the near closure of fruit and vegetable processors, SPC Ardmona and Simplot.
The lobby group wants the federal government to "encourage states to develop a nationally consistent approach to unconventional gas supplies".
"These challenges include limited ability to pass through higher costs, retail price deflation, a major shift of profit from suppliers to retailers, loss of flexibility in labour markets and high regulatory costs," the AFGC told The Australian.
The AFGC made a submission to the Eastern Australian Domestic Gas Market Study which is currently being conducted by the Department of Industry, stating that the increase in gas prices will impact negatively on multimillion dollar energy efficiency projects.
"This includes investment in low-emissions technologies such as gas-fired boilers, co-generation and tri-generation plants. With gas prices forecast to double, these new installations are likely to become less economically viable.
"Perversely, high gas prices are likely to drive an increase in emissions, as manufacturers switch to lower-cost but more emissions-intensive fuel sources."