SYDNEY – The dramatic floods across eastern Australia are destroying crops, threatening to curb supplies of fruit and vegetables and drive up grocery bills for inflation-weary consumers.
Torrential downpours have swamped parts of New South Wales and Victoria, some of the country’s biggest food-producing regions. Growers are racing to salvage apples, pears and peaches due to be harvested this summer, adding to fears that consumers will feel the pinch of higher prices to come.
“Things are going to be delayed quite a bit with harvest – it’s more so about the mould and the wet conditions that we’ve had,” said Mr Michael Crisera, grower services manager for Fruit Growers Victoria. It will take up to eight weeks to know the full scale of damage from moisture-related diseases, he added.
The potential disruptions to food supply come at a time when food prices are elevated globally, including in Australia. Annual headline inflation accelerated to a 32-year high in the third quarter, with fruit and vegetable prices leading the charge in food and groceries. Analysts are warning of worse to come.
“Further rises are expected in food prices in the fourth quarter and into 2023 as the impact of current and recent flooding in agricultural regions weighs on food supply volumes,” said Rabobank senior food retail analyst Michael Harvey.
Australia’s second-largest supermarket, Coles, is also predicting that inflation will accelerate further as a result of flooding.
“We do expect cost price inflation to increase given that suppliers are still seeking further increase to cover their costs and obviously there’ll be some further disruption from the flooding,” said Mr Steven Cain, chief executive at Coles, in an earnings call on Wednesday.
There are also concerns about grain supply and quality in major growing areas across New South Wales and Victoria. Millions of tonnes of wheat, barley, and canola are expected to be damaged from heavy rain, which is hindering farmers from collecting their crops.
The long run of wet weather over many parts of Australia has been driven by three consecutive years of La Nina, leading to multiple episodes of crop losses. Earlier this year, rampant flooding wiped out lettuce supplies, causing a shortage that even spurred fast food giant KFC to replace it with cabbage in its burgers. Bloomberg