Nathan Free, Mark Billing: Food price inflation set to continue

Food prices are expected to continue to rise with producers’ margins to be tightened as input costs increase. See the latest analysis on inflation.

After a year of record inflation, food prices are expected to continue to rise with producers’ margins to be tightened as input costs also rise.

The Australian Bureau of Statistics latest data showed annual food price inflation reached 9 per cent in the September quarter, the highest annual rise in food prices seen since 2006, with the annual inflation rate reaching 7.3 per cent.

The ABS’ figures revealed in the September quarter fruit and vegetable prices increased by 4.5 per cent for a total of 16.2 per cent in the 12 months to September 2022.

Victorian Farmers Federation director and horticulture president Nathan Free said he expected food prices to climb further as continued fuel, fertiliser, labour and transport costs are compounded by the effects of the Victorian and NSW floods.

Nathan Free from Tresco, Lake Boga, in his apricot orchard in 2019. Picture: Chloe Smith

“There will be a tremendous lag to come because we don’t know the effect on the crops in the ground which are going to be harvested in the middle of next year for example,” he said.

“There will be a lot of pain in agriculture in Victoria before we see the sunlight coming through.

“Usually we are making sure our product is in the packhouse and being delivered to our customers on time, but at the moment we are spending extra time, effort and money to make sure our fruit and vegetable crops are going to be sellable.”

Rabobank senior food retail analyst Michael Harvey also said flooding across eastern Australia was likely to reduce the supply of food in the market, further increasing prices.

Over the past 12 months producers have faced rising input costs such as, transport costs increasing by 9.2 per cent, including a 18 per cent increase in automotive fuel.

In the September quarter there was a slight reprieve with transport costs remaining relatively steady after a -0.4 per cent price change.

Milk also recorded the highest year-on-year price inflation since recording began with dairy and related products rising by 6.8 per cent in the September quarter due for a total of more than 12.1 per cent compared to September 2021.

United Dairyfarmers of Victoria president Mark Billing said despite the increase in milk prices, margins in the industry were tightening.

VFF UDV president Mark Billing.

“Some of the input cost increases we haven’t seen since the GFC,’ Mr Billing said.

“All our costs are increasing and some are in double digits.

 “With fertiliser, power, fuel and labour costs increasing, costs are blowing out and it is hard to absorb.

 “Margins are getting squeezed and it is going to come down to managing your budget and getting the one percenters right.”