‘A shortage of everything’: More pain in store for grocers and shoppers amid food supply havoc

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Rabobank senior analyst Michael Harvey said he expected the price pain to continue well into next year, mainly due to the invasion of Ukraine.

Globally, the price of fuel, fertilizer, chemicals and grain has all risen, and food supplies have deteriorated due to labor shortages caused by COVID-19 and reduced migration to Australia.

“There are definitely elements of what’s going on at the moment that you’ve seen in the past,” Harvey said. “But I think it’s fair to say that the number of seismic events at one time is quite unprecedented.”

Harvey said some fruit and vegetable prices could fall as the effects of rain and flooding in Queensland ease.

AusVeg spokesman Tyson Cattle said Victoria typically relied on growers in Queensland during the colder months, but paddocks in productive regions remained soggy, meaning farmers couldn’t harvest or plant new crops. Wet weather has also closed roads to transportation. Fuel costs had nearly doubled in the past year, raising the cost of using machinery on farms, Cattle said. High fuel prices had increased transportation costs at every level of the supply chain.

Vee said costs to growers have increased by 35 to 45 percent in the past year and the price of fresh produce is likely to remain high.

Victorian Farmers Federation President Emma Germano.Credit:Simon Schluter

Emma Germano, president of the Victorian Farmers Federation, said many farmers are still failing to cover their production costs and consumers are likely to see more shortages. “I think we’ll see more of that as we go along,” she said. “It is inevitable that prices will rise.”

She said some farmers had started scaling back production because of the pressure.

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John Droppert, a Dairy Australia analyst, said some dairy products could be 10 to 20 degrees higher than the prices supermarket customers had expected. He predicted they would continue to rise, with milk and butter being the worst hit so far.

Beef prices have also risen from an average of $25 per kilogram to $28, said Patrick Hutchinson, chief executive of the Australian Meat Industry Council.

The industry expects retail meat prices to fall next year as more supply becomes available, but Hutchinson said staff shortages could derail the expected price cuts. “We hear of meat processors buying motels to accommodate people [to work] in rural Australia,” he said.

Groceries at supermarket giant Woolworths rose an average of 2.7 percent in its most recent quarterly results released this month.

And not only fresh food is affected. Tissues have been affected by the same shortages and transportation costs. A spokeswoman for Kimberly-Clark, which makes Kleenex, said demand for toilet paper and tissues was still above pre-pandemic levels.

Sharon Napoli, owner of Napoli’s Quality Fruit Market in Williamstown, said supply problems had become especially noticeable in the past month. Asparagus was of such poor quality she ordered out of stock, and broccolini was hard to come by. Parsnips used to cost $6.99 per kilogram but were now $13.99, she said.

Heidelberg’s fruit and vegetable delivery service, the Groene Groenteboer, recently raised its prices after holding them during the COVID-19 lockdowns.

“I think the biggest contributing factor to [the] If the cost of fresh food goes up, the flow-through effect for us would be the transportation costs,” says co-owner Patrick Parsons.

“We recently had to raise our prices to reflect the change in the market. Most customers are understanding, but it can’t be easy for them either.”

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