As input costs continue to rise across a range of food and grocery categories in Australia, growers and manufacturers are finding it difficult to contain costs, resulting in a likely price increase of consumer products.
“There have always been fluctuations in prices, particularly for fresh products due to seasonal issues such as drought and floods, but there are other factors that are now impacting on the cost of producing items,” Food and Grocery Council Chief Executive Dick Wells said.
Wells commented that while suppliers and retailers are sensitive to consumer sentiment on price increases and seek to reduce costs, increases remain inevitable.
“Input costs for fuel, fertiliser, labour and other inputs have increased substantially, but the fact is that farmers and manufacturers along the supply chain have been absorbing these costs for a long time”, Wells said. “At some point this becomes unsustainable and to remain viable companies have no choice but to seek to pass some of the costs on.”
According to the Australian Food and Grocery Council, the alternative use of grains and oil seeds to produce bio-fuels has contributed to the rising cost of inputs. Despite being an unpopular reality for consumers, increased food and grocery prices are necessary if the supply is to be maintained and improvements in food safety, traceability, innovation, range and quality are to continue.