Produce supplier Darling Group does not generally import Australian tomatoes into New Zealand.
Founder Andrew Darling says although his company is a ‘big tomato player’ on the other side of the divide, the current juicy price of tomatoes in New Zealand means it makes financial sense to sell the staple households across Tasman.
There are political sensitivities to bringing in Australian toms, so Darling says the New Zealand company is careful to only import “when there’s a real shortage and there’s a dollar to be made”.
“And now is one of those times.”
Inflation is a global story, but New Zealand consumers received a stark reminder of how inflation is spreading, including in the pantry, this week when Statistics NZ released the Food Price Index .
The latest index showed food prices soared in August this year compared to August 2021, recording the fastest increase in the price we pay in the supermarket since 2009.
Headline food inflation was 8.3% a year in August, a price increase not seen in 13 years, as grocery food prices rose 8.7%, mainly due to higher prices eggs, yogurt and cheddar cheese.
Other items driving the price rise were fruit and vegetables, which saw a 15% annual increase, with Stats NZ pointing out that peppers, potatoes and onions were on the rise. origin of the annual price increase, while monthly prices were pushed up by tomatoes, peppers, and cabbage.
So what is happening that leads to these higher prices?
Yes, part of that is global inflation, but there are also more specific issues at play depending on which veges you’re looking at.
Take tomatoes, the star of higher priced fruits and vegetables.
Food Price Index data from Stats NZ shows the price of tomatoes has increased by 162% since 2009.
If you take a look at Countdown’s website, it currently sells fresh tomatoes in bulk for $14.99 a kilo, as does New World, owned by Foodstuffs.
In January, when Stats NZ released that month’s food price index, the price of tomatoes had almost doubled in December 2021 compared to December 2020, and the price per kilo rose from $3.33 to $6.61.
Jerry Prendergast is President of United Fresh, an incorporated not-for-profit company that works for its members in the produce industry.
He says the industry faced “very unusual circumstances” for tomatoes in 2021 when the Pepino mosaci virus (PepMV) was found on crops in Auckland.
This disease affects the yield of affected plants and retards fruit growth.
“It actually caused a lot of problems with the tomatoes that were planted and had already been planted as we went from September to summer, actually tormented us. The tomato industry and growers have struggled to eradicate this disease.
Tomato prices are usually high anyway during winter months like August, says Prendergast, but there are other reasons why this August was particularly expensive.
This tomato disease also meant that eight export markets were irrelevant for growers.
Prendergast says there is generally a “reasonable” amount of New Zealand export tomatoes, but some growers have decided not to replant for export due to increased transport costs, which means that surplus export tomatoes that might have been sold in New Zealand will simply not be available. This year.
New Zealand consumers get many products this way, says Prendergast. New Zealand exports apples, so there is usually a surplus of apples for local consumption. New Zealand grows a lot of avocados for export; Kiwi consumers are once again enjoying what is left.
“But growers haven’t planted for export this winter. And to make it worse, the growth cycles were out of balance… Due to the [disease] that tormented us through the summer and fall, they are just resuming their cycles. So you have two or three things here; you have growth cycles that are falling back into place, you have exports that have not been planted, and you have the traditional winter crop that is extremely difficult to grow.
A wild, wet winter also costs us when we want tomatoes.
According to industry group Tomatoes NZ, around 150 tomato growers in New Zealand produce tomatoes with a “farm value” of $120 million a year with an export market valued at around $11 million, the Japan being the main destination.
It released a fact sheet this year highlighting the issues it believes are hampering the industry. He says the rising cost of growing tomatoes coupled with low prices is not sustainable and will force growers out of business. He says “the tomato industry is under threat”.
At the top
And then there’s the issue of rising costs.
Supermarket chain Foodstuffs released its own data to point out that it also pays higher prices, but to its suppliers.
It indicates that in August 2022, the average increase in the supplier cost price of food cooperatives on the same products measured in the food price index basket was 8.2%.
As Darling says, “everything goes up”.
Whether it’s fuel (the price of diesel has soared to over $2.50 and is about the same as regular unleaded 91 gasoline) or labor or maintenance costs. fertilizer or compliance or electricity, it all adds up to more expense — hopefully in pursuit of more productivity, Darling says.
“Overall, costs over the past five years at an orchard level have gone from about $10,000 to $12,000 per hectare to $25,000 to $30,000 per hectare. But it’s not just about cost increases, it takes inputs for more yields, like putting in more fertilizer to grow more fruit.
In the case, for example, of the avocados in which Darling Group is heavily involved, these rising costs in relation to a glut of avocados coming onto the market in high season meant that it was letting the fruit fall to the ground and rot this season.
And it’s not just avocado growers who are leaving because of rising bills.
Prendergast says some New Zealand growers of leafy greens (like lettuce, cabbage) didn’t harvest their crops at all because it just wasn’t economically viable to spend more money to harvest than ‘they won’t earn by selling.
He says for the first time last summer growers said that with rising costs it was impossible to pick the crop. In previous years, growers could have picked and taken the crops to market and gotten a low price, but now it’s not worth it.
“That has never traditionally happened.”
He says “the dynamics have now changed”, and growers will choose to either drop fruit and rot like Darling Groups avocados, or mow or till certain crops like lettuces.
“We see these decisions being made now.”
Prendergast says this is a new trend that he thinks will happen more in the future, alongside changes in how people choose to grow what they grow.
He says the rising cost of producing fruit and vegetables means that speculative growers won’t decide to plant a crop and see what happens; growth will be more planned, structured and large-scale, which will mean less ‘flow’ of products entering the market to be sold to New Zealand consumers.
And in the future, Prendergast expects more “feast and famine” for New Zealand shoppers.
He says that over the next six to 12 months, consumers will see plenty of leafy greens and vegetables, but because of this swampy winter, there will be “funny gaps” in supply.
Because the water tables are high and the soil is moist, the vegetables will stay dormant longer, so “they grow slowly.”
And yes, he expects prices to continue to rise because of these rising costs.
“The market understands this and needs to react. The supermarkets will react because they know they have to pay more, if they want to get it. The independent producer knows this, and the processors know this and everyone understands this, and they work to do their best to be ahead of cost. So we will see an increase. However, when there is an oversupply, usually supply or demand principles apply and we see the price go down.