Exports have an impact on the cost of living

New Zealand’s food security could be in jeopardy because vegetable growers cannot afford to pay the same for wages and land that growers of high-value export fruit can, says a large-scale fresh produce grower.

Richard Burke, chief executive of Leaderbrand, said vegetable growers had little opportunity to expand their operations by buying land to grow more produce, because growers of export crops, such as apples or kiwifruit, were making large profits and could pay more for land.

That artificially pushed up land prices, Burke said.

Vegetable growers could also not compete on wages with export growers, he said.

Coupled with high prices for transport, fertiliser, fuel and high inflation, there were now huge risks involved in growing vegetables, Burke said.

Because growers had to pay more for land and labour, they had to ask more for their products to remain profitable. High food prices, and high prices for resources, were becoming a trend, he said. This could become a food security issue, Burke said.

As growers faced more difficulties to grow vegetables, consumers would also face swings in prices, Burke said.

If growers were facing higher costs to grow, they might plant less, which would increase prices.

Broccoli was a good example of how pricing worked, Burke said. It cost a certain amount to grow, but a grower could not simply add a markup to make a profit. Growers had to determine what price buyers were willing to pay for it.

Growers sometimes sold crops for less than the cost of growing them and sometimes for more. They looked at profitability over an entire year, Burke said. Growers were profitable when there was stable pricing and enough fresh produce to sell, Burke said.

The public perception about increasing food costs influenced shopping behaviour and impacted growers.

If cheaper frozen vegetables became popular, local growers would lose out because most frozen vegetables were imported, Burke said.

Food security depended on vegetable growers remaining competitive and having access to labour, land and water, Burke said.