Fuel crisis sparks produce price spiking alarm as big chains work to absorb pain
Sourse: Dairy Australia
Australia’s biggest independent supermarket chain is warning of looming price spikes for fresh fruit, vegetables, meat and milk as retailers face being forced to pass on rising costs of the fuel crisis.
Ritchies CEO Fred Harrison said all major retailers including Coles and Woolworths were trying to absorb extra transport costs but Aussies would soon start feeling shopping basket pain - within weeks.
“We have suppliers who are putting on a fuel levy and we are absorbing that,” the retail industry veteran said. “Prices are stable right now but if this continues, prices will rise in the next two to three weeks.” He warned if farmers cut back on sowing due to lack of diesel in the bush “we’ll be feeling the impact in six months”.
NSW Farmers economist Sam Miller said price rises of up to 20 per cent were just “the starting point” with fresh everyday staples with further to travel to supermarket – such as lemons and onions – slugged with up to $1 a kilometre transport levy.
“Prices are going up almost immediately because fresh produce, fruit and vegetables, are being grown on a weekly basis year round and fuel costs are hitting both production and transporters who move the products around,” he said. Mr Miller said transport was a third of the cost of onions, strawberries, mushrooms, Kiwifruit and pears – and prices may jump by 10 per cent.
When the Ukraine war began in 2022, bread rose 14 per cent a quarter for a year. It pushed a loaf up from $3 to $3.90. Milk went up 20 per cent and steak by 24 per cent. “We can take those price rises as a starting point now,” he said. “People are saying this is worse than anything since the 1970s. It’s hard to be optimistic.”
Milk producers on Friday asked Australian supermarkets to up the price of homebrand milk by at least 30 cents a litre. Master Grocers Australia CEO Martin Stirling said it was worse for small retailers in rural and regional areas because of digreater distances to transport goods and Federal Government cost-saving measures would only delay rises. “Our members are feeling incredible pressure from multiple angles, it is a true structural crisis,” he said.
“It is inevitable everything produced on a farm is going to increase in price, starting with fresh produce. That means meat, vegetables, bread, milk, the staples of Australian life are going to be more expensive.”
Mr Stirling said the Australian economy had never been “so unprepared and so reliant on imports”. Australia needed to use natural resources to produce fuel and fertiliser, he said.
“We need to start a conversation now to ensure that in any future crisis we are able to sustain and run our economy.” Glen Innis farmer Leanne Hamel, at the Sydney Royal Easter Show, said diesel costs and drought were challenges.
Arid conditions were “widespread” with “people already starting to feed their stock because of the dry situation”.
Mrs Hamel said paying above $3 a litre for diesel wasn’t normal and “affecting everything, having a down the line effect on all businesses”. Wagga Wagga cattle farmer Paige Hatton said the fuel crisis and drought were some “of the most hardest battles”.
An Australian Retail Council (ARC) survey shows the fuel crisis impacting stores with 90 per cent hit with higher fuel costs and almost a quarter passing them on. ARC CEO Chris Rodwell said four out of five businesses said if the Strait of Hormuz stayed blocked it would cut profitability and a third said it could force closure. Nearly all believed it was going to worsen.
“Retailers are being hit hard by the sharp increase in costs at the same time as consumer spending is constrained.”
Prime Minister Anthony Albanese has cut fuel excise and rolled out $1 billion of interest free loans to businesses. A Government spokesman said oil prices were “putting upward pressure on prices” but tough new rules outlawed any supermarket price gouging.
A Coles spokeswoman said it was working with suppliers to try and stop cost rises “flowing through to the shelf”.
“Long-term, direct relationships with suppliers, including Australian farmers, mean we are able to work with them to manage their own cost pres-
sures, support continuity of supply, and smooth the impact on consumers,” she said.
Woolworths has nearly doubled a levy for independent truckies – metro deliveries face a 23.12 per cent levy and rural-regional deliveries a 58.52 per cent levy. A Woolworths spokesman said: “Retailers and suppliers have a careful job to sustainably manage growing cost pressures while also trying to reduce the full impact on shoppers. Joe’s Fruit World owner Vincenza Colagiuri said price rises were inevitable and already reflected in changing shopping habits."
AUTHOR: Matthew Benns
“We have suppliers who are putting on a fuel levy and we are absorbing that,” the retail industry veteran said. “Prices are stable right now but if this continues, prices will rise in the next two to three weeks.” He warned if farmers cut back on sowing due to lack of diesel in the bush “we’ll be feeling the impact in six months”.
NSW Farmers economist Sam Miller said price rises of up to 20 per cent were just “the starting point” with fresh everyday staples with further to travel to supermarket – such as lemons and onions – slugged with up to $1 a kilometre transport levy.
“Prices are going up almost immediately because fresh produce, fruit and vegetables, are being grown on a weekly basis year round and fuel costs are hitting both production and transporters who move the products around,” he said. Mr Miller said transport was a third of the cost of onions, strawberries, mushrooms, Kiwifruit and pears – and prices may jump by 10 per cent.
When the Ukraine war began in 2022, bread rose 14 per cent a quarter for a year. It pushed a loaf up from $3 to $3.90. Milk went up 20 per cent and steak by 24 per cent. “We can take those price rises as a starting point now,” he said. “People are saying this is worse than anything since the 1970s. It’s hard to be optimistic.”
Milk producers on Friday asked Australian supermarkets to up the price of homebrand milk by at least 30 cents a litre. Master Grocers Australia CEO Martin Stirling said it was worse for small retailers in rural and regional areas because of digreater distances to transport goods and Federal Government cost-saving measures would only delay rises. “Our members are feeling incredible pressure from multiple angles, it is a true structural crisis,” he said.
“It is inevitable everything produced on a farm is going to increase in price, starting with fresh produce. That means meat, vegetables, bread, milk, the staples of Australian life are going to be more expensive.”
Mr Stirling said the Australian economy had never been “so unprepared and so reliant on imports”. Australia needed to use natural resources to produce fuel and fertiliser, he said.
“We need to start a conversation now to ensure that in any future crisis we are able to sustain and run our economy.” Glen Innis farmer Leanne Hamel, at the Sydney Royal Easter Show, said diesel costs and drought were challenges.
Arid conditions were “widespread” with “people already starting to feed their stock because of the dry situation”.
Mrs Hamel said paying above $3 a litre for diesel wasn’t normal and “affecting everything, having a down the line effect on all businesses”. Wagga Wagga cattle farmer Paige Hatton said the fuel crisis and drought were some “of the most hardest battles”.
An Australian Retail Council (ARC) survey shows the fuel crisis impacting stores with 90 per cent hit with higher fuel costs and almost a quarter passing them on. ARC CEO Chris Rodwell said four out of five businesses said if the Strait of Hormuz stayed blocked it would cut profitability and a third said it could force closure. Nearly all believed it was going to worsen.
“Retailers are being hit hard by the sharp increase in costs at the same time as consumer spending is constrained.”
Prime Minister Anthony Albanese has cut fuel excise and rolled out $1 billion of interest free loans to businesses. A Government spokesman said oil prices were “putting upward pressure on prices” but tough new rules outlawed any supermarket price gouging.
A Coles spokeswoman said it was working with suppliers to try and stop cost rises “flowing through to the shelf”.
“Long-term, direct relationships with suppliers, including Australian farmers, mean we are able to work with them to manage their own cost pres-
sures, support continuity of supply, and smooth the impact on consumers,” she said.
Woolworths has nearly doubled a levy for independent truckies – metro deliveries face a 23.12 per cent levy and rural-regional deliveries a 58.52 per cent levy. A Woolworths spokesman said: “Retailers and suppliers have a careful job to sustainably manage growing cost pressures while also trying to reduce the full impact on shoppers. Joe’s Fruit World owner Vincenza Colagiuri said price rises were inevitable and already reflected in changing shopping habits."
AUTHOR: Matthew Benns
Key News of the Week
