Let’s talk about the price of food
Food prices are bugging people this winter. It feels like we’re being ripped off. Part of the problem is inflation is supposed to be low. It is for TVs and phones and clothes and broadband plans. It definitely is for wages. But food — and fresh, healthy food in particular — hasn’t stuck to the script.
Food prices rose 2.2 per cent in the March quarter but fruit and veg were up 16 per cent.
I have three children growing relentlessly towards their teens so I’m never quite sure how much of my everexpanding weekly grocery bill is to do with price inflation.
For many, the unfairness of New Zealand food pricing was illustrated by a news story in which an expat Kiwi back on holiday complained on social media about how expensive New Zealand grocery items were compared to his new home in Australia.
His comparisons were mostly fresh fruit and veges but also dairy products, which are always a hot one in this country.
Dairy is New Zealand’s culturally significant food of protest. It’s the one we get hot under the collar about.
Other countries have different foods of protest — in India it’s onions and in Indonesia it’s chillies.
Richie Leef’s story seriously struck a nerve with the public here. But for me it was the over-consumption of pineapple by one of the Business Herald team that highlighted the weird things happening to market pricing.
“My wife’s annoyed that I ate all our pineapple last night,” one business team member remarked as we packed up for the day. “Now I’m going to have to stop and get another one on the way home.”
I hadn’t previously thought of pineapple as that kind of staple food, although that wasn’t what struck me as odd at the time.
“At least they’re cheap, only $3,” my colleague said. What? I recently paid $7 for a locally grown cauliflower, so the price of a pineapple stopped me in my tracks.
I know there is the cheap labour issue and the hidden environmental cost of shipping food half way around the world.
Food pricing is a complex business. There’s primary production and the fickle weather that farmers battle.
Late summer and autumn were very wet. We had three cyclones in a row. There was a spinach shortage and carrot prices spiked 51 per cent.
There’s also variable transport and logistics costs. And global market pricing — which is the price Kiwi consumers pay for having an open, unsubsidised export economy. But why should it all be so much cheaper in Australia? They have weather and export markets.
Are we so much more focused on exports that we’re not looking after our own people? Do we lack supermarket competition?
There’s a multitude of places along the value chain where we might be paying too much.
This is where the Government comes in. Normally I’d be sceptical of calls for an inquiry. But this Government does seem to be getting good at them.
Energy Minister Judith Collins scared the bejesus out of the petrol companies with her pricing inquisition — they dropped their margins 10 per cent before the report was even released.
Regardless of politics, there is fertile ground here (yes, a horticultural pun) for all parties to campaign on this.
We’re working hard to solve housing. Food is an even more fundamental human need. Let’s step back and look at the whole structure of non-export food production in this country.
Weather is a short-term issue that has exacerbated things this year. But long term, security of internal food supply is crucial. We are facing some seriously big issues around land use.
We’ve turned more and more land into dairy farms. Meanwhile, population growth and demand for new housing is putting the squeeze on the best horticultural land at the fringes of our cities.
I don’t think supermarkets are price gouging but, that said, duopolies don’t usually deliver a highly competitive market.
Competitors like Nosh and the Mad Butcher have been struggling to hold ground.
The Warehouse tried its luck in the sector and pulled back when it became clear Kiwis were wedded to one big weekly shop.
HWhat’s your view? letters@hos.co.nz
The third biggest food retailer in the country is now My Food Bag — growing fast but off a small base and with a very different model.
We can’t expect food producers to subsidise the local market but it isn’t implausible to imagine we could collectively choose some state subsidies for good food.
Ideas like removing GST on fresh fruit and veg have been dismissed as too complex. But there may be other methods.
If government price regulation is too radical, are there ways to encourage growth in market competition?
Could we get a cut-price supermarket chain like Germany’s Aldi to set up shop? Can we smooth the regulatory environment for delivery services like My Food Bag and others to grow faster?
It’s time to time to take a fresh look at the questions. We should get someone scary like Judith Collins to ask them.
Energy Minister Judith Collins scared the bejesus out of the petrol companies withher pricing inquiry.