Fruit and veg prices on the up

Posted by James Ferre on 26th May 2008

As the world struggles with escalating wheat, rice and dairy costs it now appears Australian fresh fruit and vegetable prices are set to rise as well.

Chief Executive Officer of Growcom, Jan Davis, claims that fertiliser and chemical prices now comprise between 11 per cent and 14 per cent of total farm input costs with the recent dramatic increase in prices blamed on a lack of fertiliser suppliers. “Growers are concerned that limited competition in the fertiliser supply industry is creating a situation in which prices can be manipulated,” Ms Davis stated.

“Growers have no more capacity to bear any further cost increases,” Ms Davis added. “Consumers who have enjoyed relatively inexpensive locally grown fresh produce for years may not like the suggestion, but farm businesses have to cover their overheads as much as any other business or fail.”

Ms Davis put pressure on governments to do something about the current situation to ensure the future success of the industry. “In the face of increasing world food insecurity, governments will have to weigh up the costs of local horticultural businesses failing in terms of the long term health of the population no longer able to prevent chronic disease through the consumption of locally produced fresh fruit and vegetables,” Ms Davis suggested. “The impact on domestic food security and the implications of greater reliance on imported food supplies must also be seriously considered.”

Ms Davis believes the situation is likely to worsen with the introduction of a carbon emissions trading scheme proposed by the federal government to be in place by 2010. “The debate about whether agriculture will be included in the scheme is currently raging,” Ms Davis said. “While the whole of agriculture is the second highest greenhouse gas emitter, largely because of livestock industries, horticulture’s emissions are considered small, with the bulk being from nitrogen fertiliser use.”

Ms Davis also cited her worries about the future competitiveness of Australia’s food production. “Some commentators have put the impact on input prices that the emissions trading scheme will bring as higher than the GST. Meanwhile, developing nations are unlikely to bear any carbon constraints, further reducing Australia’s competitiveness on the world market.”

“Governments in years to come will bear the consequences when Australians wonder what happened to the food bowl that used to exist in their own country,” Ms Davis concluded.

The statement from Growcom comes as the ACCC look into fertiliser prices and the nature of supply competition in the industry, and amidst global concern about food prices and potential shortages.