Rising fuel and fertiliser costs are expected to affect food prices and production levels in Australia, with impacts likely to move through the supply chain in the coming weeks.
"We estimate in a matter of weeks we'll start to see the costs flow through to the consumers on supermarket shelves," he said. "It starts with dairy, then our fruit and veg, and in any of our intensive animal industries too."
The National Road Transport Association indicated that higher fuel prices will also affect freight costs. "Come the 21st of April, when a lot of the fuel bills start to come in, and the fuel price will have increased steadily to then, we're going to see some major changes in this freight industry," he said.
"You could see (food) prices increase dramatically. It's the only way that people can grasp how bad this situation is — when they go down to their supermarkets and shops, the stuff's just not there to buy."
Input availability is also affecting production planning. A western Queensland grower indicated that urea supplies are currently sufficient for winter crop establishment, but availability later in the season remains uncertain. Prices have increased from US$870 per ton near the end of February to more than US$1,225 as of March 15, with reports of up to US$1,600 in some regions.
"What we don't have is enough to apply in-crop and get set up for summer crops," he said. "If we can't get our in-crop requirements after May, the winter crop in Australia could be halved."
He added that around 40 per cent of farmers may not be able to plant due to limited access to fertiliser. Smaller operators, who rely on spot purchases, may face additional constraints. "More than likely, they will not get access to urea," he said. "It's that serious."
In the vegetable sector, input costs are affecting planting decisions. Michael Coote, chief executive of Ausveg, said growers are facing higher diesel and fertiliser costs. "Vegetable growers heavily rely on diesel to run their farms and have already seen the price double with increasing reports of shortages in regions across the country."
He added that fertiliser prices have also increased. "Fertiliser suppliers have also doubled some prices over the past two weeks with questions over future supply, and concerns have been raised over supply and cost of other key inputs like plastics for packaging as the manufacturing industry sounds the alarm."
Growers are evaluating production plans under current conditions. "Growers across the country are reporting to Ausveg that they are seriously considering whether to plant or harvest crops, with some growers making these decisions as early as this week," Coote said.
With 98 per cent of fresh vegetables consumed in Australia produced domestically, changes in planting and harvest decisions are expected to influence supply.
Source: News.com
