Nothing hits a family’s weekly budget harder than increases in the costs of daily essentials like food. Price hikes at the supermarket make consumers angry and politicians nervous.

The Australian's Kudelka

And all shoppers know that the price of many staples have increased over recent years.

This was highlighted by the latest OECD figures showing the cost of feeding an average family has risen about 40 per cent in Australia over the past decade. So who is to blame – major supermarkets, manufacturers, the government?

Let’s have a look at the facts.

While there’s no doubt food prices have risen over the past 10 years – like all other commodities – food has actually increased in price at a lower rate than wages have increased.

The latest ABS figures* show average weekly earnings for men and women in Australia have risen by more than 50 per cent over the past 10 years with figures showing total weekly earnings rising from $611.00 in May 1999 to $922.50 in May 2009.

So food is actually more affordable than it was 10 years ago for the average family.

It will be no surprise that salary costs are one of the major inputs into the cost of food. Whether it be jobs on the farm, in the factory, in transport or in the supermarket – wage increases significantly effect the price of food. 

Australian food and grocery manufacturing industry – which in a new report was found to be the nation’s largest manufacturing sector ,employs about 315,000 people including half in rural and regional areas. And this does not include the large numbers of people working in agriculture and in retail.

There are also price pressures from a range of other areas, including weather extremes like drought and floods and the cost increases in packaging, water, transport and energy. Other major challenges surround the strengthening Australian dollar.

The rapid urbanisation of the world’s growing population has meant that land use per capita for agriculture has declined, putting further global pressure on food production and prices.

Global commodity prices have skyrocketed with wheat rising from US$154 a tonne in 2004/05 to more than $270 a tonne in 2008/09 according to the latest ABARE figures, which also show rice has jumped from US$278 a tonne to more than $600 a tonne over the same period.

Basic food commodities rose by 60 per cent between 2006 and 2008 with the Food and Agriculture Organization of the United Nations (FAO) saying that the pre-2006 prices will never be seen again.

Australia is also facing the pending problem of the Federal Government’s proposed Carbon Pollution Reduction Scheme (CPRS) and Renewable Energy Target (RET) that will cause the price of energy to rise between 30 to 40 per cent.

This will ultimately increase food, beverage and grocery prices of products made in Australia by up to five per cent on Australian supermarket shelves.

So wages increases, climate change, increases in energy and commodity prices and currency volatility all put pressure on food prices.

Kate Carnell is Chief Executive of the Australian Food and Grocery Council.

* ABS figures sourced from Average Weekly Earnings, Australia (dollars) – Seasonally Adjusted – May 2009.

Most commented

16 comments

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    • RT says:

      05:11am | 11/11/09

      Former politician uses mastery of spin as paid mouthpiece to distort figures on behalf of duopoly client.

    • JA says:

      07:21am | 11/11/09

      hmm…. I’m immediately questioning the reliability of the statistics.  It’s one thing to say that weekly earnings have gone up, but have they risen evenly across all pay scales, or is it the obscenely wealthy at the top whose own bureoning wages distort this figure?? 
      From where I sit, and I am somewhat of a conservative ‘average earner’, it seems an increasing stretch to pay the grocery bills…

    • SM says:

      07:56am | 11/11/09

      Back about 13 years ago, I took a job in Darwin.  In those days, we had 2 airlines.  Qantas and Ansett.  Phoned up Qantas and asked how much for a one way ticket. $929 they said. Pretty expensive I thought. So I phoned up Ansett to get a quote from them.  Ansett’s price? $929

    • Richard says:

      09:11am | 11/11/09

      The trouble is, Kate, that you have carefully avoided the main issue the latest OECD figures on food prices around the world have disclosed - that is that food prices in Australia have increased by a lot more than in any other country.  In other words, in case it is not clear, food prices in Australia have risen by much more than anywhere else in the world.  Perhaps you can explain that to us, Kate.  Can I make a suggestion?  There is one fact that distinguishes the Australian market from other OECD countries - it is dominate by only two large retailers.  Perhaps this might just have something to do with it?

    • Liz says:

      09:29am | 11/11/09

      Hmm! You talk about earnings etc what about figures for those on pensions which you seem to have ignored in this rather one-eyed article.
      Part of what makes the two dominate retailers expensive is the lack of real competition, the distances food travels and the packaging.To reduce your spending try using Farmers’ Markets.

    • Ms Mouse says:

      09:32am | 11/11/09

      Not even decent spin-an unanswered question and a string of Non sequiturs ,and two paragraphs on the CPRS (not yet in existence).Kate is definitely missing her former staffers

    • shabangabang says:

      09:46am | 11/11/09

      @Richard,
      Food pices increasing is only a small part of the story. Actual prices is the main part.
      ie. if initial price was $1 and the price rose by 1$ that is a 100% increase.
      however if inital price was $4 and the price rose by $1 that is a 25% increase. What would you be happier with, the food that grew in price by 100% but is still cheaper, or food that grew at 25% but is dearer?
      Relative to other nations our food is still cheaper. Get over it.

    • BW says:

      12:55pm | 11/11/09

      Living in one of the most expensive cities in Australia (Canberra), yeah sure, grocery prices could be better, but it gets much much worse. I just got back from New Zealand, and in Christchurch, in the middle of a fertile agricultural district, grocery prices were atrocious. A litre of milk was almost $2, and meat was ridiculously expensive - eg. at least $15/kg for chicken breast fillets. If we think our supermarket duoploy is bad, one only needs look at the situtation of our Kiwi cousins to put things back into perspective!

    • E says:

      01:00pm | 11/11/09

      Australian Food and Grocery Council - Industry funded lobby group .. nuff said.

      Clearly if the Australian Food and Grocery Council is scared about this, its probably their client’s fault. So based on the ‘follow the money’ principle, I reckon the manufacturers are gouging everyone, because we all know farmers get bugger all of this cash.

      This article was brought to you by the people who brought you smaller package sizes at the same price and 30% water by weight in frozen vegies, good on you Kate, you must be so proud of your work.

    • Brian B says:

      01:19pm | 11/11/09

      Geez Kate!! You must be dizzy from the spin. What a load of codswallop.

    • N says:

      01:25pm | 11/11/09

      Kate, I’m pretty sure that the majority of Australia has not seen a wage increase in the past 3 years, while the price of goods continue to rise at a steady rate. Couple that with an almost certain rise in inflation (thanks labour for throwing money around willy nilly) and that steady rate is going to sharply increase as the reserve bank fights to decrease it by raising interest rates.
      Welcome to a labour monetary policy of double digit inflation and interest rates reminiscent of the Hawke / Keating era.

    • SM says:

      02:38pm | 11/11/09

      Ms Carnel, how stupid do you (and your employers) think the public are?

      Your opinion (if you actually believe the tripe you’re trying to sell, which you surely couldn’t) has no validity whatsover.  That’s because the members of the organisation you represent (companies like Sara Lee, Kraft, Unilever and Nestle) directly benefit from prices being high.

      And separately, why on earth would these companies choose to employ a former POLITICIAN to try and get them some credibility and respect in the marketplace?

    • Richard says:

      02:59pm | 11/11/09

      @shabangabang
      Could you please provide the evidence and the source for your assertion that “relative to other nations our food is still cheaper”.

    • Daniel says:

      06:27pm | 11/11/09

      This woman Kate Carnell is the same woman that has no issues with salt levels in Australian foods.Remember that.

    • Mark says:

      12:30am | 12/11/09

      The “Strengthening of the Australian Dollar” would not be an issue affecting grocery prices if more fresh produce was sourced locally instead of from cheap price fluctuating imports.

    • JEANNEHunt says:

      01:22pm | 06/07/11

      Have no a lot of money to buy a building? Don’t worry, just because it is available to receive the loans to work out such problems. Thus get a secured loan to buy all you need.

 

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