Farmers say Australian consumers could pay more for everyday staples for the next year at least as a result of the US-Israel war on Iran.
But the CEO of dairy farmer cooperative Norco, Michael Hampson, says a six- to 12-month disruption to food supply is likely a best-case scenario, depending on the strait of Hormuz reopening soon and global petrochemical supply chains beginning to stabilise.
“If it isn’t resolved promptly, as in the next week or two, the fallout for this event is going to make Covid look like a tea party,” Hampson said.
“We won’t be worried about running out of toilet paper – we’ll be worried about not having food.”
The northern New South Wales and Queensland based co-op boss said milk shortages are unlikely at present, but consumers should expect to pay more for milk in the short term, saying 30-50 cents a litre price hikes “wouldn’t be unreasonable”.
Sign up for the Breaking News Australia emailBut Hampson said primary producers were already looking at longer-term challenges. Some were paying more than twice as much for fertiliser as before the crisis, while others could not get diesel deliveries. Without tractors, key planting windows will be missed, while scarce fertiliser could result in lower yields.
Norco milk processing plants – by no means the largest in the country – were already facing an extra $1m in fuel costs a month.
In addition to the freight costs crippling all regional industries, dairy faced its own particular shortages. Milk bottles, Hampson said, are made from fossil fuel resins. Unless global supply chains flow again, those plastics will be impossible to source.
“Then it doesn’t matter how much it costs – because we won’t have anything to put the milk in.”
The fruit and vegetable sector is factoring in a similar timeframe of disrupted supply.
Fruit Growers Victoria’s Michael Crisera said the crisis had struck “right smack bang in the beginning of apple harvest”.
“We’re nervous, without trying to panic,” he said.
That harvest had a number of comparative advantages, he said. It didn’t require “heaps of diesel” and the crop could be stored. But the crunch will come when fruit has to go from packing shed to supermarket, with transport costs on deliveries already doubling compared with the costs prewar, according to Crisera.
“Unfortunately, our costs are going to go up with every box – we need to be able to pass that on.”
Crisera said it was “still too early in the piece to know” how much more consumers would pay. But he said growers were already more vulnerable than during the pandemic lockdowns.
“We’ll continue to work hard to feed the nation,” he said. “It is just whether we’ve got the fuel to do it [and] … we don’t know if we’re gonna have the fuel.”
Banana Growers Australia deputy chair, Stephen Lowe, said while his industry faced a similarly acute crunch, retailers had chosen to reduce prices on that staple fruit.
But with farms on the brink of running out of fuel, Lowe said that low price was unsustainable.
“With such a huge increase in input costs – which bananas especially rely heavily on fuel and fertiliser and transport, because we transport them a long way across the country – that retail increase will be directly attributable to the increase in petrochemicals,” he said.
Goodwill Projects market coordinator, Mark Power – which runs a dozen farmers markets around south-east Queensland – said vendors and growers were drawing on their experience of previous crises as they prepared for the next six to 12 months.
He said consumers would either not be able to get certain produce, brought in from interstate or overseas, or should expect to pay “a serious mark-up”.
Instead, he encouraged shoppers to instead buy what is more easily available – and not judge by looks, but taste.
“One of our key messages for the next few weeks is going to be around education around what is grown locally,” he said.
“We saw a lot of this through the GFC and we’ve learned a lot of lessons around that … it has to be seasonal.”
