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Bushfires, drought to see grocery prices soar up to 50%

Vegetable and meat prices will be hit by the drought and bushfires. Images: Getty

The severe drought and bushfire crisis could see vegetables become up to 50 per cent more expensive as closed highways and ruined crops limit supply.

The warning comes after the egg sector said the severe drought would see prices rise from $3 a dozen to $3.10 a dozen for caged eggs and cereal producer Kellogg’s last year also warned prices will rise due to the drought which has not yet been broken. 

The drought is impacting on the prices for a range of food products. Prices rose this quarter for meat and seafood (+1.7 per cent), dairy and related products (+2.2 per cent) and bread and cereal products (+1.3 per cent)," ABS chief economist Bruce Hockman said in September. 

Additionally, Australia’s food bowl, the Murray-Darling Basin has seen lower than average rainfall, leading to higher prices even before the catastrophic bushfire season began. 

Vegetable prices to rise up to 50%

But now that the bushfire season is well underway, Australian consumers can expect to see vegetable prices rise by as much as 50 per cent, peak vegetable industry body AUSVEG has warned. 

That’s due to blocked roads hiking transport bills and destroyed crops reducing supply, spokesperson Shawn Lindhe told Yahoo Finance.

Additionally, limited power supply has seen cold storage facilities and associated produce affected. 

He warned that most vegetable prices will be impacted, with Queensland buyers the most affected by the longer travel times. 

The logistical difficulties could see vegetable prices rise by as much as 50 per cent in the “worst-case short-term scenario”, but prices are unlikely to return to normal levels until the bushfire crisis is solved. 

Meat prices not immune to bushfire threat

The bushfires have captured the nation's attention. Image: Getty

Meat and dairy prices will also be hit. 

“In terms of prices of food, you might have seen reporting that supermarkets are letting the Australian public know that they'll have to pay more for their red meat. Yes, you will,” Agriculture Minister Bridget McKenzie said on Tuesday. 

"Farmers don't grow food for free, it's a business. I know we like to get all a bit romantic about it but the reality is it's a business and they need to make a living and that means we need to pay the cost of producing the food."

Coles, Woolworths respond

In a statement to Yahoo Finance, a Coles spokesperson said that while some fresh produce products may be limited or unavailable for the short term, it is “working hard” to support suppliers affected by the fires. 

Coles said it has also not been required to increase milk prices due to the direct contracts it holds with dairy farmers. The supermarket giant makes additional payments to farmers to help them meet the higher expenses incurred by the drought, without passing on higher prices to consumers.

“None of the dairy farmers with whom we have contracts in Victoria and NSW have so far been directly impacted by the current fires,” the spokesperson said. “However we are in regular contact with them and will provide further assistance if required.”

Woolworths said is has not yet seen an impact on its fresh food supply.

“We have been focused on supporting impacted communities with financial and practical on the ground support in evacuation centres across Australia,” a spokesperson said.

“We have also been actively monitoring the impact of the bushfires on our fresh food supply chain with our suppliers.”

The federal government on Tuesday announced it will give up to $75,000 to bushfire-affected farmers who need to repair their properties, as part of a $100 million promise to support Australian agriculture in the wake of the infernos. 

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