Australian federations call on supermarkets to accept price increases to protect food supply

Ausveg is urging all Australians to keep the nation's vegetable growers front-of-mind this Easter, as an industry which provides 98 percent of Australia's fresh vegetables continues to face ongoing uncertainty, and unprecedented cost pressures.

Australian vegetable growers work 52 weeks of the year to grow, harvest and supply 10,000 tonnes of fresh vegetables for Aussie consumers each day, but surging fuel, freight and fertiliser prices mean their financial viability is fragile, as many growers are unable to pass on additional costs.

"As Australians sit down to Easter meals with friends, families and loved ones, we encourage every Aussie to consider where the food on their plates has come from, and spare a thought for the nation's vegetable growers, working tirelessly through extreme uncertainty, surging production costs, and critical input shortages to make meals like these possible," said Ausveg CEO Michael Coote.

"Major and continuing concerns over cost, supply and availability of critical farm inputs like fertiliser fuel and freight, which have also flowed through to cost surges and new surcharges affecting every aspect of growers' businesses, have already led to vegetable producers adjusting their plans and planting schedules, and are continuing to threaten their future viability.

"These issues won't magically disappear after the Easter break, and it remains critical that all Australian vegetable growers receive assurances from their customers that they will receive viable farmgate prices for their produce, and assurances from the Government that they will be prioritised for critical farm inputs like fuel, fertiliser and freight.

"Ausveg has met with the major retailers, and the Food and Grocery Code Supervisor, to emphasise that all fresh produce buyers have an obligation to consider genuine, evidence-based price increase requests from growers in good faith, and is continuing to engage at the highest levels of government daily to highlight the urgent need to give growers greater certainty that they will be prioritised for access to critical inputs as a essential sector.

"Without these assurances, as well as action on the longer term, system-wide issues that have increasingly threatened vegetable grower viability over recent years, the supply and availability of critical, safe, fresh Australian vegetables will decline.

"As cost of living pressures continue to flow through from the Middle East conflict, we will continue to see a worsening of the silent epidemic that has resulted in more and more cheap, imported frozen and processed vegetables increasingly make its way from supermarket shelves into Australian fridges, freezers and pantries, at the expense of Australian growers and future food manufacturing capacity."

"We are already seeing how detrimental it is to Australia's national security when we rely so heavily on overseas inputs such as fertiliser and fuel – so are we prepared to lose Australian food production systems to overseas as well? If we cannot maintain food production and processing systems here in Australia, this will only increase our reliance on imports, and increasingly vulnerable international supply chains."

"Many of the of the extreme cost and supply issues Australian vegetable growers are currently facing are a direct result of – or compounded by – issues Ausveg and growers have been raising with governments for years," said Mr Coote.

"The Australian vegetable industry's vulnerability due to overreliance on imported critical farming inputs like, fertiliser, fuel, seed and crop protection products among others, is playing out in real time now, and a key Ausveg priority over many years has been calling for governments to urgently prioritise bolstering Australia's sovereign manufacturing capability."

Ausveg also acknowledges the Government's announcement today of a $1 billion package to support industries affected by surging costs, and shortages flowing from the war, in the form of interest-free loans. While these appear primarily directed at fuel, fertiliser and other supply chain businesses, it is critical that relief flows through to vegetable producers in the form of reduced cost pressures, and it is unclear how the measures announced today will directly benefit vegetable growers and their businesses.

"With the Government having committed to significant reforms to be unveiled in its upcoming budget, Ausveg is also emphasising the urgent need for action on the key issues facing growers, which were already threatening their viability, before the war," said Mr Coote.

Meanwhile, the NFF Horticulture Council has written an open letter to Australia's major supermarket chains urging them to respond promptly and constructively to price increase requests from fresh produce suppliers, as fuel and freight costs continue to escalate.

Fuel prices, fuel levies and transport surcharges are rising rapidly and, in some cases, changing daily. For a sector that relies heavily on refrigerated, long‑distance freight, these increases are placing immediate pressure on growers and suppliers across Australia.

The Council said timely acceptance of cost‑reflective price adjustments was essential not only to maintain current supply, but to send the confidence signals required for growers to continue investing in future production.

"Supermarkets are critical partners in the fresh produce supply chain. How they respond to these cost pressures now will directly influence whether growers have the confidence to keep planting, investing and producing for the future," said Chair of the Council, Mr Jolyon Burnett.

Queensland Fruit & Vegetable Growers CEO Scott Kompo-Harms said fuel surcharges applied by freight companies had risen rapidly, with those further away from capital city markets most heavily impacted.

"We're hearing fuel surcharges of up to 65 percent of the value of the consignment being applied on top existing freight costs for growers in Far North Queensland. This increase blows out of the water the already thin margins for fresh produce growers," Mr Kompo-Harms said.

The Council noted that ongoing uncertainty around cost recovery is already influencing decision‑making at farm level, with some growers delaying or scaling back production in response to rising input costs and weak price signals.

Peter Spackman, CEO of vegetablesWA, said confidence in not just the fuel price, but the ability in the regions to source enough fuel to sustain elementary production practices had already led to the abandonment of future plantings.

"We are aware growers, with no prospect of being supplied by their regular distributor, are currently running into the outskirts of Perth on a daily basis looking for diesel to run pumps and irrigation among other things. It's no way to run a business and makes it easy to understand why growers are reconsidering plans for putting more seedlings in the ground," Mr Spackman said.

Mr Burnett said these pressures come at a time when supermarkets have an important role in helping stabilise the supply chain and preventing future shortages and food price spikes by supporting continued domestic production.

Mr Burnett also highlighted the importance of supermarkets conducting all trading practices, including negotiations over new grocery supply agreements, in good faith. This includes recent concerns raised publicly and through government processes regarding supplier pressure, pricing references below the cost of supply, and the reliability and transparency of volume forecasts provided to growers.

"Good faith dealing means accurate forecasts, fair negotiations and recognising the real costs being borne by suppliers," Mr Burnett said.

"Where growers have invested on the basis of supermarket forecasts, those volumes should be honoured before alternative sourcing is pursued."

The Council emphasised the very same fuel challenges were being experienced in the nursery industry and the same request applied to Bunnings and their handling of price increase requests.

Greenlife Industry Australia CEO Sean Cole said growers of ornamental plants were also experiencing rapidly escalating costs of production and transport that were cutting into their own thin margins.

"Greenlife growers of any scale need to deal with Bunnings as the dominant retailer of its products to the public. The extent to which Bunnings supports its suppliers through the current crisis will for many growers determine whether they're still in business once fuel prices and supply normalise," Mr Cole said.

The Council emphasised that supermarkets and big box retailers play an indispensable role in Australia's fresh produce and nursery industries and that strong, transparent supplier relationships are fundamental to ensuring affordable, reliable access to fresh food and plants for Australian consumers.

"We all share an interest in a resilient horticulture sector," Mr Burnett said. "Supporting growers through periods of acute cost pressure is not only fair, but also essential to safeguarding the nation's food security."