Chicken, dairy and vegetable prices are expected to rise again, another La Nina forecast predicts

This will affect dairy products in general. Prices of refrigerator staples like butter, cheese, cream and ice cream have already risen, according to Frugl data.

The price of margarine has risen the most since August last year, up 51 percent, while cooking oil and chips are now 33 percent higher than a year ago. Milk, peanut butter and feta cost more than 14 percent compared to before, while butter is 12 percent more expensive, data from Frugl shows.

Barry Irvin, CEO of dairy and food giant Bega, confirmed prices would be raised “across all channels” including milk, cheese, yoghurt, spreads and jams, juices and more.

The managing director of restaurant supplier United Foodservice, Ayman Zoghaib, expects milk prices to rise by 40 percent in the next 6 to 12 months.

“I’m sorry for that [food producer]they need to be more conservative in how they manufacture their products, likely downsizing or drastically increasing their prices.”

Bega passes on higher costs to customers via its products.

Bega passes on higher costs to customers via its products.

However, the National Farmers Federation’s chief economist Ash Salardini pointed out that milk prices were starting from historically low levels. Cooking oil prices would also remain elevated, he said.

“That [Russia-Ukraine] Uncertainty leads to risk and with risk comes increased costs,” he said.

Another La Nina would mean shortages of vegetables – again

While prices for fresh produce like vegetables and fruit have fallen from recent highs (KFC had to replace lettuce with cabbage while some subways avoided doing so), the likelihood of another La Nina event later in the year threatens further shortages and supply chain disruptions cause along the east coast.

Perishable foods would be hit the hardest if La Nina caused flooding, as it did earlier this year.

“If it rains at the wrong time – if it rains just before and during harvest, [there will be] Issues around grains and legumes and things like that, so it’s going to have a pretty broad impact on plant products,” Salardini said.

Fresh produce such as lettuce and eggs would also be affected, said Associate Professor Flavio Macau of Edith Cowan University, a supply chain expert, as flooding again caused delays in local supply chains.

“These delays are usually the reason for empty shelves,” Macau said. Supermarket giants like Coles and Woolworths tend to work with fewer but larger suppliers, meaning less buffer if those supply chains are disrupted, he said.

Amid warnings of more frequent unusual extreme weather events, shoppers should get used to empty supermarket shelves from time to time, Macau said.

“We can now anticipate that it could be a bushfire this year, flood next year, God knows when a hurricane or typhoon is coming and hitting the wrong place. [We’re] Don’t prepare for the end of the world, but prepare for these disorders to become more common… and learn to live with them.”

Further shortages of fresh produce will also lead to higher demand for frozen vegetables, a trend Woolworths has been observing.

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“We’re seeing some customers shifting from beef to more affordable protein sources and from fresh vegetables to more affordable frozen and canned offerings,” Woolworths CEO Brad Banducci said Thursday.

Another severe COVID-19 wave would be “very difficult” for Ingham’s, whose operations have still not fully recovered from January’s Omicron surge due to labor shortages. The poultry supplier was forced to downsize some product lines and scale back production volumes due to COVID-related downtime, which also meant the ASX-listed company had to pay higher temporary wages.

In the last 2.5 years, food suppliers and retailers have had to adapt to the uncertainty in the supply chain.

“We’re sitting on a record amount of stock just to make sure we’re consistent in the market and to make sure we have a supply for our customers,” Zoghaib said. “That costs a lot of money and is currently a heavy burden on cash flow.

“If you talk to me next week there will be another new product that I can’t get my hands on.”

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https://www.smh.com.au/business/consumer-affairs/get-used-to-food-shortages-chicken-dairy-veggie-prices-predicted-to-rise-again-20220823-p5bc52.html?ref=rss&utm_medium=rss&utm_source=rss_business Chicken, dairy and vegetable prices are expected to rise again, another La Nina forecast predicts

Brian Lowry

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