Food inflation: Where Aussies will feel the sting the most

New data says that Aussie food is some of the world’s most affordable. But where do we stack up against our neighbours, near and far?

Food price inflation has been a hot topic in the past month, with the Russian invasion of Ukraine trigging a wave of global concern for food security.

The conflict, coupled with months of rising input costs for primary producers, has generated much discussion about what the impact could be in coming months for the average Australian buying milk, bread and vegetables during their weekly shop.

First, it’s worth noting the percentage of weekly income devoted to groceries in Australia is relatively low when compared to other nations.

The cost of groceries for the average Australian are forecast to rise in coming months. But experts say other inflationary pressures may be felt more keenly.

Concerns that Australians could find supermarket shelves empty are unrealistic due to the sheer amount of food we produce per capita.

A Grain Growers state of the industry report published last year showed Australia had the highest per capita production of wheat in the developed world, with an average of 1.01 tonnes per person.

While about 60 per cent of that is exported, it still leaves enough flour to bake more than 1300 loaves of bread for every Australian.

Domestic supply of other commodities is also secure: data provided by Thomas Elders Markets puts fluid milk production at about 350kg per capita, and beef at about 70kg per person.

Source: Included

Data published in 2016 by the US Department of Agriculture showed the amount of money Australians spent on food as a per cent of consumer expenditure was some of the most affordable in the world.

Australians spend about $120 a week on food, or about 10 per cent of last year’s median Australian employee earnings of $1200 a week.

According to those metrics, food affordability in Australia was much better than for consumers in China, who in 2016 were forking out 22 per cent of consumer expenditure on food.

Across the Tasman, New Zealanders spend up to 14 per cent of consumer expenditure on food each year, as do shoppers in Hong Kong.

But in Black Sea nations, consumers spend about 30 per cent of their income on food in Russia, and 38 per cent in Ukraine, according to 2016 data.

While a few years old, this data demonstrates the general affordability of food for many Australians.

For former Woolworths chairman John Dahlsen, perception is everything when it comes to the possibility of rising food costs.

Last year, Mr Dahlsen released a report explaining Australian milk prices were exceedingly low compared to other developed nations.

While Australian producers were locked into price contracts, Mr Dahlsen said he believed customers would happily pay extra for a litre of milk when market conditions required a rise in price.

“I think it’s a game of perception,” Mr Dahlsen said. “There’s been so much discussion about the dire situation of our dairy farmers, (consumers) are more likely to accept an increase, because everyone particularly in the country, know how our farmers are affected.

“The key thing to me is you have to differentiate the very low income earners compared to the high income earner.”

Veteran businessman John Dahlsen says Australian milk prices are some of the most affordable in the world. Picture: Zoe Phillips

Thomas Elders Markets analyst Andrew Whitelaw said general inflation of goods and services for the average person won’t be felt as keenly as other inflationary pressures, such as dearer fuel and interest rate rises.

“As the price of bread goes up say 10 per cent or 20 per cent, we don’t really notice it because we don’t really buy that much bread,” Mr Whitelaw said.

“But in Egypt, it’s a big proportion of their diet, so as bread prices rise substantially, it hurts their bottom line a lot more.”

Mr Whitelaw said he’s not convinced food inflation would result in a food security issue for Australia, despite producers having to spend more to produce the same amount of food for domestic and international consumption.

“Farmers are taking a risk by planting a crop, which at the moment, they need to make sure they get above average yields and a decent price, just the break-even,” Mr Whitelaw said.

“Malnutrition in this country is relatively low, so clearly we are feeding most people. From a philosophical point of view, do we pay too little for food?

“I guess it’s the value of that food … if we paid more would it be valued more?”