Blogs

25 May 2017

Chicken Farmers – Wake Up and Smell the Protein


Share article:

Chicken Farmers – Wake Up and Smell the Protein

Chicken farm image

Energy prices in Australia have risen sharply over the past decade, and putting pressure on businesses of all kinds[1], with the agriculture industry being affected more than most.

Chicken is the most popular form of protein for Australians largely as it’s cheap to buy and easy to prepare. According to the Australian Bureau of Agricultural and Resource Economics and Sciences, over the past 20 years prices for poultry have remained flat. This is great for consumers, but not for farm operators, especially as energy costs increase.

For smaller companies, the situation is being exacerbated by increasing competition from large operators such as listed growers ProTen and Rural Funds Management (RFM), which are building million-bird farms in Griffith and Tamworth.

Larger, more efficient companies, are benefiting the most from rising protein demand. According to the Victorian Farmer’s Federation, the market share of chicken farms in that state – which are typically smaller in size – has dropped from 28 per cent five years ago to just 21 per cent.

Rising energy prices and increase in competition not only affects those employed in the farm, but the wider community and economy.

As a result, many have had to close their farms, not only affecting those working on the farm, but the local economy, increasing unemployment.

However, if businesses could access alternative forms of funding giving them the opportunity to access vital infrastructure, such as solar power, could these farm closures have been avoided?

Cutting costs

The first place businesses tend to look at to reduce cost is their energy bills. Many may feel that this is easier said than done, but accessing solar power really is a lot easier, and can be a lot more cost effective, than you may think.

Farming chickens requires significant amounts of electricity for ventilation and climate control systems, lighting, feed and water delivery systems, and managing waste. But that’s not the only part of the business that uses electricity. Energy also needs to be provided to any office buildings and storage facilities that the business may own.

A recent study by the Australian Government’s Rural Industries Research and Development Corporation suggests farm operators could save energy by adopting renewable energy sources to provide the energy needed to house birds and power the rest of the farm’s properties.

Using renewable energy can lower ongoing energy costs and protect the farm against energy price fluctuations as well as reduce the farm’s environmental impact.

Solar solution

In November 2016, SolarCity, owned by technology powerhouse Tesla, announced the installation of a solar power and battery storage-enabled microgrid on the remote island of Ta’u in American Samoa. This microgrid can supply nearly 100 per cent of the island’s power needs on solar energy, providing the community with reliable access to energy without damaging the environment.

By utilising solar batteries the island’s residents don’t need to worry about a lack of energy on overcast days or at night, as excess energy is stored in the batteries and can keep the island’s energy going for three days.

If solar power can work for an entire island, it can work for a chicken farm.

Craig Henderson, a broiler chicken farm owner and broad acre farmer in south west Victoria recently installed solar power as a way to maintain cash flow and manage business growth, proving that renewable energy is a viable option.

More often than not, the most common reason for not acquiring new infrastructure is the upfront cost and inability to access capital. But just as we no longer use enormous scythes to cut down crops, we no longer need to be restricted by ‘one size fits all’ funding.

Initial outlay costs can be high but by working with an independent funder that can provide a tailored growth capital solution that eliminates the need for capital outlay and keeps energy costs as an operational expense. This enables the business to access funding to acquire the assets they need over an agreed term and provide access to energy sooner rather than later.

But what about repairs and upgrades?

Maintenance and upgrades can be included in the funding agreement (depending on the solution provided) which mean operators have more time to focus on growing their business and not the bills coming through the door.

What are your thoughts on renewable energy and access to solar power? Share your thoughts below in the comments section or send me a message on LinkedIn.

 

[1] http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook44p/EnergyPrices; https://www.gizmodo.com.au/2017/03/australian-electricity-prices-have-doubled-since-the-carbon-tax-was-abandoned/

Related Blogs, News

28 May 2018 by Maia Financial

IFRS 16- challenges and opportunties in the new leasing standard

View PDF

13 February 2018

New Zealand Tipped for New NZD$70 Billion Capital Formation Record

Read

9 February 2018

Kiwi businesses amp up equipment investment for export push

Read

Subscribe to our insights

See how your business compares to other market players and receive free regular reports.

*Required fields

Discover our latest research reports:

February 2018

New Zealand Tipped for New NZD$70 Billion Capital Formation Record

Read

February 2018

Kiwi businesses amp up equipment investment for export push

Read