Staples such as milk, butter, cheese and yogurt could be the next to see a sharp price rise as the effects of a global dairy shortage loom for Australia.
Inflation, electricity prices, drought, floods and fertilizer costs have put a strain on supply, the Victoria Farmers Federation (VFF) said on Thursday.
He also cited farmers’ struggles with land acquisition and access to irrigation as issues compounding their efforts to bring popular dairy products to consumer tables.
Supply disruptions have been compounded by sanctions against Russia and Belarus as well as export restrictions imposed by China
The dairy price hike warning comes after supermarkets reported record price increases for groceries, especially canned goods, soft drinks and coffee
A spokesperson for the Victorian Farmers Federation said: ‘Fertile, well-watered farmland produces the best and greatest agricultural produce. The less land of this type available, the less product the agricultural industry produces.
A spokesperson for VFF told Daily Mail Australia that the floods in New South Wales and Queensland had not solved the problem as they were “destroying large areas of prime agricultural land”.
The result is fewer products available on supermarket shelves.
“The less of a product we have, the more demand there is and that’s when we see prices go up,” the spokesperson said.
Weather-related problems have combined with an unprecedented increase in fertilizer costs to the industry, giving farmers no choice but to pass on these costs.
“Fertilizer is a major input cost…and is needed to produce the volume of food we create,” the VFF spokesperson said.
“The more prices rise, the more farmers have to absorb these costs which are inevitably passed on to consumers.”
Inflation, electricity prices, drought, floods and fertilizer costs have strained the supply of dairy favorites like cheese, the Victoria Federation of Farmers said on Thursday.
Floods in Australia’s eastern states (pictured are parts of southeast Queensland flooded last month) have not helped as they have destroyed large areas of prime farmland
Global fertilizer costs have risen nearly 30% since the start of the year after prices rose last year by a whopping 80%, the world Bank said last month.
He also said concerns about the accessibility and availability of fertilizers had been amplified by the war in Ukraine.
Supply disruptions have also been compounded by sanctions against Russia and Belarus, as well as export restrictions in China.
The normally low cost of urea – the most common fertilizer on the market – has risen above its 2008 highs to cost nearly $1,300 a ton – up from $200 in 2016.
Farmers have also endured more pain with restricted access to irrigation in drought conditions in the south of the country since December last year.
The Bureau of Meteorology said on Tuesday there were “serious rainfall deficits” in southeastern South Australia, southern Victoria and western Tasmania.
Dry conditions can drive up feed and water prices for dairy farmers, as well as deplete water supplies for animals.
Dry conditions can drive up feed and water prices for dairy farmers, as well as deplete water supplies for animals (pictured is collecting stock for a feed in the extreme western New South Wales)
“Fertile and well-watered agricultural land produces the best and greatest agricultural products. The less land of this type available, the less produce the agriculture industry produces,” the VFF spokesperson said.
The dairy price hike warning comes after supermarkets announced record price hikes for groceries, especially canned goods, soft drinks and coffee.
Australians are also seeing the cost of living soar, with weekly bill totals rising.
Australian families spend $1,770 a week on basic necessities, with transport costs rising 12.9% over the past year, double the already high rate of inflation.
In the year to March 2022, inflation jumped 5.1%, the fastest pace in 21 years, with the International Monetary Fund speculating that it would continue to rise.
An IMF report last April said: “Standard economic theory states that inflation will spiral out of control under a prolonged mix of certain monetary and fiscal policies, but whether inflation will persist at this end merits further consideration”.
The big four banks said they would pass on the entire interest rate hike announced on Tuesday to home loan customers, sending household mortgage bills soaring.
The Reserve Bank said there would be a 50 basis point jump in the spot rate, taking it from 0.35% to 0.85% – the biggest monthly increase in 22 years.
To cope with pressures on electricity costs, the new Labor government is urging coal-fired power stations (pictured, the Callide power station in Queensland) to increase production as soon as possible
To cope with pressures on electricity costs, the new Labor government is urging coal-fired power stations to increase their production as soon as the east coast shivers during a freezing winter and world gasoline prices soar.
The Greens argued this was the wrong approach and instead called for massive and rapid investment in renewables to achieve net zero carbon emissions by 2035.
But former Deputy Prime Minister Barnaby Joyce said Australia’s actions would make no difference to global temperatures as China and India forge ahead with more coal power.
“China has seen record coal production in the past two quarters. If Australia were to disappear off the face of the earth, China would have us covered in about a month,’ he told Daily Mail Australia this week.
Rising electricity prices have contributed to the expected rise in the cost of dairy products such as cheese