Inflation: Cost of vegetables set to rise, growers say

Growers are warning the cost of vegetables will go up as economists predict the sharpest inflation spike in three decades.

The latest Consumer Price Index data will be released later on Thursday morning and New Zealand's major banks predict the figure will rise to 7 percent or higher. 

Jay Clarke, the director of Woodhaven Gardens which grows 24 different crops, told AM they're facing unprecedented cost pressures just to keep the business alive.

"Some of that's driven from international factors; the price of fertiliser has gone up over 300 percent, the cost of fuel has gone up a couple of hundred percent," Clarke told Ryan Bridge on AM.

"Then there are things like seed, freight that we have to acquire to get our products to market that are up 30 or 40 percent. Cost pressure across the board is out of control.

"Then, there are also some internally driven things that come from Government policy as well. We've seen labour costs rise by about 60 percent over the last three years and that's driven by minimum wage increases and constraints on our labour market, with Government implemented COVID policies and immigration settings."

Clarke told AM New Zealanders would be shocked to learn how often growers sold products at a loss.

"The prices that we receive are really set by the retailers," he said. "I'm hoeing up iceberg lettuce by the hectare every day at the moment because the price the retailers are willing to pay for it is so far below our cost of production that we can't justify sending it to market and that's a tragedy - it's wasted food."

Figures released last week showed food prices between March last year and March 2022 had risen by 7.6 percent - the biggest jump in more than a decade. 

Clarke told AM the cost increases had been brewing for about the past five years.

"As cost pressures mount, and the difficulties of doing business increase for vegetable growers, it was going to lead to higher price points for the consumer and now it's playing out."

The Government needed to work alongside growers to develop a national food strategy, he said.

Inflation: Cost of vegetables set to rise, growers say
Photo credit: Getty Images

James McLean, the owner of the retailer Simply Fresh NZ, said there were many factors impacting the growing price of vegetables.

"The thing to consider about produce is that, compared to other foodstuffs, it's still quite low value so if you talk about tomatoes at the moment - at $7 a kilo - you need to sell a lot of tomatoes to be able to make a living out of it," he told AM.

"The last quarter [of the year] has been quite challenging because we've seen some unprecedented prices for things."

A report by the Commerce Commission in 2019 showed farmers received between 16 and 18 percent of the price of vegetables - and a variety of factors throughout the supply chain influenced the final price. 

As the cost of living crisis has mounted, New Zealanders have on average spent an extra $4000-$5000 in the past 12 months on basics including food, rent and fuel.

The Government has blamed "global factors" for rising inflation.