If it seems like your grocery bill is more expensive than ever, it’s because the price of food hasn’t been this high since Australia last had back-to-back La Niña weather systems a decade ago.
Now there’s a chance we’ll get a rare “triple-dip” La Niña.
Most important points:
Pantry commodities have seen the biggest price hike in a decade as food manufacturers are forced to pass on cost increases. Price tracking shows instant coffee is up 47 percent, olive oil is up 30-50 percent, and dried pasta is up 30 percent since its inception of the pandemic Despite high prices, some vegetable growers are still struggling, and lobby groups feel they should be paid more.
That would be a continuation of the devastating weather that has plagued agricultural regions on Australia’s east coast this year, when the pandemic continues to ravage the country, and there is no end to the war in Ukraine.
Experts say these events have led to an “unprecedented” confluence of domestic and international pressures affecting supply chains and driving up food prices.
The cost of fresh fruit and vegetables has already risen due to widespread flooding in Queensland and New South Wales. The prospect of a third La Niña could disrupt the traditionally volatile market more.
La Nina Facts:
Three-year La Niñas are rare, most recently occurring in 1973-76 and 1998-2001. While a La Niña brings wet weather to Australia, it brings dry weather and heat to places like South America and East Africa. It’s hard to predict when and how strong damp weather could be, but if a third La Niña comes, it probably won’t be strong
But experts are divided on whether La Niña’s weather pattern will last and for how long.
“The predictions from the US [are] … at 50/50, which I think is roughly about where everyone sits,” said University of Southern Queensland climate scientist Chelsea Jarvis.
Dr. Jarvis said the current La Niña would likely last through the winter.
“Usually, if a La Niña goes through July and August a bit, it will continue into the spring and into the summer,” she said.
Why are the prices rising?
The most recent ABS inflation data from March showed that food inflation was up 4.3 percent from a year ago, with the biggest jump in the price of fresh vegetables and meat – 6.7 percent and 6.2 percent, respectively.
But food inflation used to be higher than this, so why is everyone talking about food prices suddenly?
John Rolfe, a professor of regional economic development at Central Queensland University, said food has become relatively cheaper in developed countries over the past 30 to 40 years.
Since agriculture had become more efficient and Australians had become richer, the cost of food wouldn’t have been a big issue, he said until now.
“Most of the greatest inflation happens in things people can’t avoid,” said Professor Rolfe.
“It’s things that are essential items that bite, and because food is one of them, people notice.”
Over the past year, the prices of many pantry staples, such as pasta, coffee, and canned tomatoes, have risen significantly. (Image: Cordelia Brown)
The current headline inflation rate of 5.1 percent seems small compared to a record high of over 17 percent in the 1970s, but the difference is that everything is getting more expensive at the same time.
“Housing and rent are very expensive now, compared to what they were in the 1970s… so there isn’t much room to move in household budgets,” Professor Rolfe said.
Inflation in the 1970s peaked at an extraordinary 17.5%, and there’s no easy way to compare now to then because so much has changed: we’ve removed protections, raised the dollar, and introduced a GST.
But according to the Australian Bureau of Statistics, the prices of bread and grain products have increased about tenfold in the past 50 years, the cost of meat is more than 12 times more expensive, and vegetables have risen by 116 per year since 1989. cent.
But there are dozens of food categories, and individual prices are affected by several factors.
Many crops were in within days of harvesting when the water hit. (ABC Central West: Mollie Gorman)
It is also very difficult to quantify costs relative to all other factors, such as income or fuel price.
For example, in 1972, the seasonally adjusted average weekly wage for a man was $91.80, and in 2021 the weekly salary for all employees was $1305.80, an increase generally in line with the rise in food costs.
However, the chart below from the Reserve Bank of Australia also shows the drastic rise in house prices since that time, further complicating food price comparisons as it has created financial advantages and disadvantages.
And the 2019 analysis shows that the cost of essential goods and services has generally risen much faster than discretionary items, putting pressure on household budgets.
In 2019, Fidelity Investments tracked the cost of essential and non-essential goods. (ABC News: Alistair Kroie)
The price of pantry basics is rising.
Another reason you might notice a jump in your grocery bill is that the price of dried and packaged products has risen significantly for the first time in about ten years.
Sean Smith, director of Frugl Limited, a digital apps-based service that tracks food prices, said the biggest price increases were seen in inventory items.
“For example, olive oil has risen between 30 and 50 percent,” he said.
Planning pays off:
You can save 25-30 percent by planning your grocery store. Major supermarkets have weekly deals but don’t carry the same products, so keep track of the offers and divide your groceries among stores. Don’t pay full price for expensive items like razors or laundry detergent because they are regularly on sale
Source: Sean Smith, Frugal
“Instant coffee is another that has gone up… a whopping 47 percent.”
Mr. Smith said the price of some basic items appeared to have risen permanently since pandemic panic buying saw supermarket shelves empty.
“We saw the price of pasta go up 30 percent purely because it was hard and challenging for them to get it,” he said.
“But we’ve never seen pasta recover. It’s never gone down.”
Rabobank senior analyst Michael Harvey said that “a confluence of factors” – including high energy and oil prices – pushed food prices up.
“You have cost pressures and headwinds in all parts of the supply chain,” he said.
“All of these events simultaneously create an unprecedented food system disruption.”
The CEO of Australian food producer SPC, Robert Giles, told the Australian Financial Review this month that the price of commodities, including canned baked beans, spaghetti, and tomatoes, would rise 10 to 20 percent to meet growing input costs.
Tanya Barden, CEO of the Food and Grocery Council, said that between 2010 and 2020, costs for food manufacturers rose by 50 percent, and producer prices had only increased by 25 percent.
“The industry’s profitability had dropped from $8 billion to $5 billion because they couldn’t pass those costs on,” she said.
“It just shows that the industry can no longer accommodate the cost increases now coming through.”
Global shipping costs have also skyrocketed during the pandemic, rising between 500 and 700 percent.
‘Fall on their swords.’
Despite the higher prices, vegetable growers such as Carl Walker – near Bowen in northern Queensland, a major winter vegetable production area – are not exactly reaping the benefits.
“Across Australia we are seeing a d, decline in product coming from areas due to a lack of workers, and that is causing a supply problem,” said Mr Walker.
High input.t costs increase production prices for farmers like Bowen-based vegetable grower Carl Walker. (ABC Rural: Ashleigh Bagshaw)
Growers are facing a 25 percent drop in available workforces, and many have relied on Pacific Island workers to help navigate their businesses through the pandemic.
With the Russian war in Ukraine underway and trade embargoes in place, the cost of diesel remains close to record highs. Russia is also a major global supplier of fertilizers, which will drive input prices further.
Some industry insiders say we should all be paying more for fresh food — top national organization AusVeg recently called on retailers and buyers to offer farmers prices that reflected the current economic climate.
“Prices are up 30 to 40 percent since last year, and we have to recoup that somehow,” Walker said.
“Unless prices remain at economically viable levels for us in the future, producers will fall for their swords because they cannot survive.”
When will food prices stabilize?
That is a good question and no clear answer.
Senior retail analyst at MST Marquee Craig Woolford said much of the price pressure resulted from the pandemic.
With so many uncertain factors, such as war and the pandemic still underway, the food price fluctuation looks set to continue.
“The rest of this year will be quite a bit of price inflation. The second wave [is] is yet to come, given what has happened to Russia and Ukraine,” Woolford said.
But there is good news.
There may be hope for long-suffering dairy farmers, many of whom have been pushed to their limits by drought and per-liter milk prices.
“Dairy farmers are getting a record high milk price, and an even higher price is on the horizon for the new season,” says Harvey.
“You have a solid global dairy commodity market, so that’s great news for farmers.”
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Posted 1 hour ago1 hour ago Tue May 17, 2022, at 12:41 PM, Updated 1-hour ago1 hour ago Tue May 17, 2022, at 12:42 PM