Veg growers grapple with cost pressures
Some fear businesses will become unviable
Some Ohakune vegetable growers say the increasing costs of production are making them question whether their business is viable anymore. That comes as Stats NZ announced yesterday the largest annual increase in food prices – up 11.3 per cent – in 32 years.
But the increase in fruit and vegetable prices was higher, up 23 per cent, Stats NZ said.
Ohakune growers are considered a major supplier of vegetables throughout the North Island in winter.
Snow Country Gardens is run by Steph and Bruce Rollinson, where they specialise in Brussels sprouts as well as parsnips.
Steph Rollinson said costs of production were up across the board about 20 per cent last season, but the price of their product probably didn’t go up to cover half that.
“So I do expect [prices] will increase [in 2023].
“We can’t continue to cover all the increase in costs.”
The cost increases on the production side as well as for compliance as a market gardener were making it almost an impossible job, Rollinson said.
“We end up having to absorb a lot of this price increase. You can only absorb so much until it’s not worth growing. It’s getting close to that point.”
Mott’s Premium Produce grows parsnips, and co-owner Jeremy Mott also raised the question of viability. “I feel like costs are coming up underneath us.
“You get to that point where you’re like, ‘What’s the point?’. I am kind of worried. You put all this time and effort in – you want to be rewarded.”
What costs more?
Rollinson said she faced big increases in fertiliser, fuel, seeds, power, packaging and freight costs.
“All of those things add up . . . they’re all increasing.”
For Mott, front of mind was the cost
It’s not like a carrot or a potato. The price will get to a certain point where they will go, ‘Oh, stuff parsnips, I’m just going to eat potatoes’. You can’t price yourself out of the market.
Jeremy Mott
of diesel, staffing and compliance.
Long-time Ohakune farmer Ron Frew, who specialises in washed potatoes, said fertiliser prices had shot up in the last few years.
He used to pay $900 a tonne for fertiliser four years ago, and now it costs him $1700 a tonne.
“That’s quite a big jump in fertiliser prices.”
Other products he requires for farming have also gone up in price — “the weed sprays, the blight sprays, what-have-you, they’ve all jumped”.
However, Frew said he expected only marginal increases in prices for consumers this year.
“The current price is already high. It’s very high.”
He expected a decent crop later in the year and that supply to retailers like the supermarkets would be good.
“Personally, I think we’ve probably reached a plateau with vegetable prices. The other thing is, we’re are at the point where customers can’t and simply won’t pay anymore.”
Mott said he got good prices for parsnips last year, but inflation ate away the profit.
“[That was the] best price we’ve had for a long time, and then you get to the end of the year and you’re lucky to have made enough money. There’s definitely no surplus around, that’s for sure.”
He said he expected prices for parsnips to have a “decent increase” this year.
But Mott said the problem with prices going up was the danger they would be too high and consumers would just not pay for them.
“It’s not like a carrot or a potato. The price will get to a certain point where they will go, ‘Oh, stuff parsnips, I’m just going to eat potatoes’. You can’t price yourself out of the market.”
Staffing and compliance headaches
Another major difficulty was getting staff.
“So, with minimum wage increases, that pushes all wages up, not just those on minimum wage. And a shortage of workers, that’s just putting more pressure on wages as well,” Rollinson said.
All of the growers also said a litany of compliance costs they faced were made worse in the face of production costs going up.
Rollinson said those could range from council rates going up, new Government regulations and industry bodies costing more.
“It’s very time-consuming. They’re all increasing.”
Despite the increases, consumers need to keep prices in perspective, Rollinson said.
“I know vegetable prices are high, but vegetable prices haven’t changed on a lot of lines. Vegetables are still a good deal.
“You compare a basket of vegetables to a basket of food from McDonald’s — really, there’s no comparison, and you’re getting good health products.”
When Mott looks back to the time his uncle and father started the business, the cost of parsnips was comparable.
“The prices we’re getting now are not much different to what they were getting 30 years ago.”
Stats NZ said the biggest driver to increased food prices was in grocery products like cheddar cheese, eggs and potato chips. But the secondlargest contributor to the annual movement was fruit and vegetables.
“The items within this group that influenced this movement the most were kiwifruit, potatoes, and tomatoes,” Stats NZ said.
A recent report from economic consultants Infometrics and Foodstuffs found costs from suppliers to supermarkets rose by close to 11 per cent in the year to December, and economists say multiple factors could result in more pain at the checkout.
Infometrics said there was still uncertainty about what would happen to the price of groceries.
Principal economist Brad Olsen said supplier costs made up twothirds of the price of the goods bought from supermarket shelves.
While global food prices were slowly starting to moderate, here in New Zealand the situation remained tough, Olsen said.
Produce supplier costs increased by 24 per cent last month, with several factors resulting in reduced supply and higher costs, he said.
“Local cost pressures and supply challenges, including labour market pressure, interest rates, stubbornly high inflation and weather look set to maintain supplier cost pressure into 2023,” he said.