Rabobank senior analyst Michael Harvey said he expects prices to fall further into next year, mainly due to the invasion of Ukraine.
Globally, the price of fuel, fertilizers, chemicals and grain have all increased, and food supplies have been worsened by labor shortages caused by COVID-19 and the reduction of migration to Australia.
“There are definitely elements of what’s going on right now that you’ve seen in the past,” Harvey said. “But I think it’s fair to say that the number of seismic events happening simultaneously is quite unprecedented.”
Harvey said some fruit and vegetable prices could fall once the impact of rains and flooding in Queensland lifts.
AusVeg spokesman Tyson Cattle said Victoria generally relied on growers in Queensland during the colder months but paddocks remained soggy in productive areas meaning farmers were unable to harvest or plant new crops. Wet weather also closed roads for transportation. Fuel costs have nearly doubled in the past year, driving up the cost of running machinery on farms, Cattle said. High fuel prices meant that transport costs at all levels of the supply chain had increased.
Cattle said costs to farmers have risen 35-45% over the past year and the price of fresh produce is likely to remain high.
Victorian Farmers Federation chair Emma Germano said many farmers were still not covering their production costs and consumers were likely to see more shortages. “I think we’re going to see more of that as we go along,” she said. “It’s inevitable that prices will go up.”
She said some farmers had started cutting production due to the pressures.
John Droppert, an analyst for Dairy Australia, said some dairy products could be 10¢ or 20¢ higher than prices expected by supermarket shoppers. He predicted they would continue to rise, with milk and butter hit the hardest so far.
Beef prices have also risen from an average of $25 a kilogram to $28, said Australian Meat Industry Council chief executive Patrick Hutchinson.
The industry expects retail meat prices to fall next year as supply increases, but Hutchinson said worker shortages could derail planned price cuts. “We hear about meat processors buying motels to house people [to work] in rural Australia,” he said.
Grocery at supermarket giant Woolworths rose an average of 2.7% in the latest quarterly results, revealed this month.
And it’s not just fresh foods that are affected. Fabrics were affected by the same shortages and transportation costs. A spokeswoman for Kimberly-Clark, which makes Kleenex, said demand for toilet paper and facial tissue was still above pre-pandemic levels.
Sharon Napoli, owner of Napoli’s Quality Fruit Market in Williamstown, said supply issues have become particularly visible over the past month. The asparagus was of such poor quality that she hadn’t ordered stock, and the broccolini had been hard to find. Parsnips used to cost $6.99 a kilogram, but now cost $13.99, she said.
Heidelberg’s fruit and vegetable delivery service, the Green Green Grocer, recently increased its prices after holding them steady during the COVID-19 lockdowns.
“I think the biggest contributing factor to [the] the rising cost of fresh food, for us, would be the ripple effect of transportation costs,” said co-owner Patrick Parsons.
“We recently had to increase our prices to reflect market developments. Most customers are understanding, but it can’t be easy for them either.
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