NSW drought: Analysts warn shoppers to expect a number of items to rise in price
GROCERY bills are tipped to soar as crops are increasingly decimated by one of the worst droughts in more than 110 years. A number of everyday items will increase while one household favourite will fall in price.
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GROCERY bills are tipped to soar as crops are increasingly decimated by one of the worst droughts in more than 110 years.
Agriculture analysts have warned supermarket shoppers of bill shock, with vegetables, bread and even margarine to become particularly expensive.
The only reprieve should be red meat, which should come down as farmers sell off sheep and cattle they can’t afford to feed.
However, the price of red meat will skyrocket when the drought eventually breaks.
Agriculture research firm Australian Farm Institute executive director Richard Heath said drought historically meant grocery bills rise at double the rate of inflation and there was no reason to expect this drought would be any different.
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“In terms of a whole basket of groceries, if you look at 2002 to 2003 drought, food prices increased 4.5% when (the inflation rate) only went up by 2.7 per cent,” Mr Heath said.
“Then in the drought between 2005 and 2007, food prices increased by 12 per cent, which was double (inflation).
“During drought red meat can become cheaper as livestock is sold off but when the drought breaks the price will rise significantly as farmers try to get hold of cattle.”
Despite the driest 14-month period across large parts of rural NSW since records began, fresh food cost rises haven’t yet hit the hip pocket as most fresh food is produced with irrigated water, according to Mr Heath.
However, the availability of irrigated water is drying up and prices are soaring.
Even after the driest start to a year in 30 years, Woolworths has made the extraordinary claim every single one of its NSW farm suppliers was completely immune to the drought.
“We don’t have any NSW growers impacted by the drought, so there’s been no impact on price or availability in our stores,” a Woolworths spokesman said.
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However, on the Woolworths websites’ “meet the growers” page, it trumpets its close relationship with Coleambally organic vegetable grower Brendan Murray, who this year has slashed his vegetable plantation by 80 per cent because his soil is so dry.
Mr Murray’s 113-hectare farm, with its own packing plant, is a large producer of broccoli, cabbages and carrots in winter, and pumpkins, onions and zucchinis in summer.
Last year Mr Murray planted 30 acres of broccoli, cabbages and carrots this year cut the size of the crop back to six acres, which he’s gradually harvesting now.
He has recently planted six acres of onions, down from 20 acres last year, and will likely also reduce next month’s zucchini plantation.
If the drought doesn’t break before summer, Mr Murray may scrap the whole venture and selling his highly lucrative irrigation water rights.
“On the temporary market, we’re buying water that was $50 two or three years ago, which is now around $250 per megalitre,” he said.
“Unless my customers can give me solid commitments they’ll give me a reasonable price, I might be better selling my water on the temporary market because I’ll make more money and have less stress.”
Any decision to pare back or scrap planting would mean laying off up to 25 pickers and packers.
According to Mr Murray, his customers including Woolworths, may not increase store prices despite a swindling supply from NSW if they “flood the market” with produce from interstate.
Grain analysis firm Mecardo this week said the impact of the drought on large cropping farms would also see increases in the price of processed food.
“The cost of production for bread and edible oils (such as margarine) will increase in NSW this season due to increased input costs,” Grain, Oilseed & Input Market Analyst Andrew Whitelaw said.
Originally published as NSW drought: Analysts warn shoppers to expect a number of items to rise in price