Food prices rise but farmers miss out

Profits higher up food chain: Food prices are rising but farmers are not getting a bigger share of the profits. Photo by Alexandra Bathman

A price hike on fresh fruit and vegetables has meant profits for some, but farmers say not for them.

The cost of vegetables increased 5.5 per cent during the June quarter, while the consumer price index on fruit jumped 4.7 per cent.

However, NSW Farmers Horticulture Committee chairman Guy Gaeta said there was mystery surrounding where the higher margin lay, because it was not with producers.

"Farmers are not reporting changes to their payment from wholesalers, driving speculation that the more powerful elements of the supply chain, including major retailers and wholesalers, are pocketing the profit," he said.

While Lebanese cucumbers were selling for up to $11.90/kg in Sydney supermarkets in early August, growers were receiving about $5/kg, equating to a 140 per cent mark-up on the farm gate price.

Red Delicious apples were retailing for $3.90/kg and going for $0.83/kg at the farm gate.

Mr Gaeta said supply chain inequities were a known challenge for fresh food farmers, who were price takers due to the perishability of their product.

"We know a lot of people are doing it tough right now and our heart goes out to the restaurants and small businesses who are suffering," he said.

"But the major retailers and wholesalers aren't struggling right now and it's irksome to think they might be capitalising from rising demand for food with the closure of other providers such as fresh food markets."

Mr Gaeta said higher prices were likely attributable to a number of factors, including labour shortages.

"There's a number of complexities behind the inflation of essential goods and we don't want to speculate too much on these, however what we do know is that farmers are not seeing a fair distribution of profit for their produce," he said.

"Many growers are in a position where they need to recoup their losses and it's heartbreaking for them to see someone else pocket the increased profit."

Modelling commissioned by grower-owned research and development company Hort Innovation suggests a shortage of up to 24,000 workers for the coming harvest season.

Quarantine capacity and costs continue to be a significant challenge, with some growers forced to pay more than $3000 per worker brought from the Pacific Islands to fill the gap.

As an alternative, labour hire company Programmed is offering up to 3000 “grey nomads, university students, rural residents and those seeking an adventure” the opportunity to harvest wheat, barley and canola across 30 locations in NSW, Victoria, South Australia and Queensland.

The National Retail Association says the usual supply of fruit pickers drawn from Australia's population of international students has been a major casualty of COVID-19.

Supermarket sales skyrocketing during last year's initial hard lockdowns would also have contributed to price changes, the association said.

The latest fruit and vegetable price hikes come on the back of ABS data suggesting the cost of an average food shop increased 2.2 per cent in 2020, well above the national inflation rate of 0.9 per cent and outstripping wages growth.

Meanwhile, research by the National Farmers' Federation and NSW Department of Primary Industries shows 85 per cent of Australians have extremely high confidence in rural industries to supply fresh food during COVID-19.