The price of tomatoes is exploding, thanks to the rising cost of three key elements, says one of the country’s largest tomato growers.
Simon Watson, managing director of NZ Hothouse, said the main reason tomatoes were more expensive was the more expensive and very scarce labour.
The cost of fertilizers and energy has also jumped, with fertilizers up 81% last year. The three items accounted for 60% of the price of tomatoes on the shelf, Watson said.
The price of tomatoes increased by almost $4 between July and August alone, according to Stats NZ.
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This price increase of 29.7%, from $12.75 per kilogram to $16.54/kg, was by far the largest in the Food Price Index.
Two years ago, tomatoes rose 38% between July and August, but fell from $9.86/kg to $13.65/kg. Adjusting for inflation, using the Reserve Bank’s Inflation Calculator, it was still lower than this year’s prices.
The price of many food products is rising rapidly, but tomatoes are leading the way. They are up 162% since 2009, when food inflation was the same as today, beating cabbage (up 138.1%) and peppers (up 118%).
The price was increasing because there was a shortage of tomatoes, for several reasons.
Labor was “incredibly short” across the economy, not just in horticulture, because the government had kept borders closed for too long, Watson said.
“We advertise week after week and you can’t get a response. It’s not even a case of what you pay.
“Labour represents a third of the value of our sales. That’s a huge part of it, the dominant part of it.
Because growers couldn’t guarantee they could plant, pick or process their crops, they planted fewer tomatoes, leading to a reduction in harvests of around 15%, he said.
“Growers have been very careful about how they spend their money, as costs have risen much, much faster than the value of the tomatoes.”
Disease was a constant threat, but growers had learned to manage it, so it was less of a problem than in previous years.
Last year, pepino mosaic virus (PepMV) was found in a number of commercial tomato greenhouses. Sick tomatoes are still safe to eat, but they damage the plant and affect production.
Although mainly grown in greenhouses, tomatoes remained a seasonal crop and were always more expensive in winter. This was due to the reduced amount of light the tomatoes needed for photosynthesis.
Additional lighting was too expensive to install and operate.
Tomato growers were under a lot of pressure, he said. “They don’t make a lot of money at all. There are a number that cling, but not many.
In his more than 30-year career, Watson said he hasn’t seen inflation to the degree the country is currently experiencing. Inflation reached 7.3% in the June quarter, its highest rate in 32 years.
“At some point, the weather will get warmer and volumes will increase, which will lead to lower prices. But that still does not remove the problem of labor shortage.“
According to the international price comparisons of the e-commerce site Picodi.com, the price of tomatoes has increased worldwide. In Turkey, they rose 121.6% in July compared to the start of the year, 30.6% in New Zealand and 26.4% in Australia.