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Chip producer warns of price rise, following almost half a million dollar gas quote increase

Chip producer warns of price rise, following almost half a million dollar gas quote increase

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WA’s only local chip manufacturer has warned it’ will be forced to increase prices following a gas price increase of almost half a million dollars.  

WA Chip is the state’s only commercial chip manufacturer and is owned by Bendotti Exporters.

Bendotti Exporters non-executive chair Brian Piesse said the company’s gas bill was increasing by 60 per cent on the last contract period of two years.

“That’s [an additional] $400,000,” he said.

“Gas is a major cost of our production. So, we’ve had to announce another increase to reflect that.”

Like many businesses in the current climate, the company is also facing rising costs of other inputs like transport, packaging and potatoes. 

WA Chip: Brian Piesse and Stephen Bendotti
Brian Piesse and Stephen Bendotti at the chip manufacturing plant in Manjimup, Western Australia. (Georgia Hargreaves)

“If [the gas price increase] had only been one part of our cost of production that had increased in the last 12 months or so, we could have probably worn part of it ourselves,” Mr Piesse said. 

WA Chips: Elgas
The chips are made using potatoes supplied predominantly by farms in and around the South West region.(Georgia Hargreaves)

WA Chip supplies many of the state’s fish and chip shops with their potato chips and hotels.

Mr Piesse said it was unfortunate to put additional pressure on family-owned businesses further along in the supply chain by increasing their prices.

WA Chip: potato crates
The company said using gas to power the chip-manufacturing machinery was still cheaper than using electricity. (ABC South West: Georgia Hargreaves)

Is WA headed for the same path as the eastern states?

Curtin University energy economist Dr Robert Aguilera said he did not think WA was likely to experience an energy crisis as seen in the eastern states.

“[WA is] the big gas producer within the country. We have far greater reserves and production compared with the eastern states,” he said.

“And with existing production and all the new projects coming, we’ll be in better shape to be able to meet our domestic requirements, but also the export obligations.”

WA Chip: image of chips being processed
WA Chip supplies many of the state’s fish and chip shops with their potato chips and hotels.(ABC South West: Georgia Hargreaves)

Dr Aguilera said any gas price pressures seen in WA were likely to be caused by global supply disruptions.

“Much of this can be explained by events going on around the world, in particular, the gas supply disruptions coming from Russia — given that that’s such a huge producer and exporter of natural gas. 

“So, when there are shortages in one important region of the world, prices tend to go up everywhere, and we feel that here at home.”

WA Chips: hot chips being served
The increase in chip prices is expected to filter down and put additional pressure on smaller businesses. (ABC South West WA: Georgia Hargreaves)

Global events impact

Elgas said it endeavoured to limit the impact of price movements on our customers.

“However, recent global events have increased LPG pricing across Australia,” it said in a statement.

WA Chip: Elgas
WA Chip uses around 1.1 million liters of LPG gas annually, which is transported into the state from South Australia. (ABC South West: Georgia Hargreaves)

“This is due to an unprecedented surge in international LPG prices associated with the impact on global oil and gas supply arising from the Russian military action in Ukraine.

“Other costs, such as fuel required to transport LPG to homes and businesses, have also increased.”

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