Energy prices have risen steadily throughout 2021, with gas prices peaking in late December. While the effects on fertiliser prices has been well documented, rising energy costs have a direct effect on other farm input costs.
Reducing exposure to rising costs involves both reducing consumption and making sure the energy you are buying is the cheapest available.
The latter involves pricing around for electricity and oil. For electricity, there are various pricing websites which compare tariffs. There are companies offering switching services.
These companies examine your consumption patterns and choose a plan to maximise savings and then take a cut of that saving for their own margin. If the house is on a different meter to the farm, it may be prudent to have one supplier for the farm and one for the house.
Most electricity suppliers offer discounts to new customers, so regularly switching suppliers is a good tactic to reduce costs. Using a night rate electricity tariff offers considerable savings also.
When it comes to oil and diesel, best policy is to shop around the various local suppliers to see who is offering the best deal.
As these prices tend to fluctuate, it’s worth keeping an eye on wholesale prices and filling tanks when prices are good and before tanks get too low and you have to buy at whatever price is available at that time.
Reducing consumption will be a necessity if you wish to control energy costs in 2022. When it comes to electricity, the main users of electricity on dairy farms are water heating and milk cooling. Combined, these account for about 50% of electricity usage.
A correctly functioning plate cooler has a payback of about three years in terms of reduced electricity costs. Most other energy-reducing items have a longer payback period.
Turning off lights when not required, not running machines for longer than necessary and being more efficient with water heating are other means to reduce consumption.
In terms of tractor diesel, tasks such as driving tractors to outfarms, rolling grass fields and topping after grazing are tasks that use a lot of diesel for little to no return and should be reconsidered.
Another way of reducing consumption is to use appropriate sized tractors for each task, with large tractors only used for tasks involving a lot of power.