Australia: Updates for vegetable growers and industry on Middle East conflict impacts

The major impacts and lasting widespread uncertainty for Australian vegetable growers flowing from the conflict in the Middle East means the vegetable industry must be recognised as an essential sector to Australia's food security, and growers given certainty from government about how they will be prioritised for access to critical inputs during this protracted conflict, and beyond.

As the immediate government response to the conflict has continued to focus on high-level measures and representations aimed at securing supply of key inputs internationally – and business relief largely landing further up the supply chain – growers are continuing to face severe cost pressures and uncertainty over future availability of critical inputs, while major concerns remain over their ability to pass the latest unstainable production cost hikes to their customers.

Ausveg's recent fertiliser survey shows ongoing shortages across a range of fertiliser types, with some growers reporting having less than a week's supply. The widespread focus on bulk urea that has dominated national fertiliser procurement discussions and efforts also does not reflect the wide array of custom or bespoke fertiliser blends vegetable growers require to optimise productivity across a diverse vegetable industry that produces 10,000 tonnes of fresh produce for the domestic market each day. In a typically high-volume, low-margin industry like the vegetable sector, productivity is key and any decline in yield due to fertiliser unavailability represents a further major blow to vegetable grower viability.

Ausveg's latest fertiliser survey remains open, and growers are encouraged to complete it here, to inform Ausveg's ongoing advocacy to government on these critical issues.

Without assurances over viable farmgate returns, and greater certainty over surging costs and input supply challenges, the chilling effect continues to see growers adjusting planting schedules and plans.

While impacts of grower decisions to reduce planting schedules during the initial weeks of the crisis will be felt in terms of reduced supply and availability of some vegetables in some locations, it is critical all politicians and key decision makers understand the slow-burning yet severe impacts on future supply of Australian-grown fresh vegetables, the longer uncertainty continues.

As a 52-week-per-year industry, vegetable growers make daily or weekly decisions about what, and how much, to plant. Grower decisions to pause or reduce plantings made today can take weeks or months to flow through in the form of reduced supply available for consumers.

The immediate and continuing effects of the conflict on grower decision making, combined with protracted uncertainty and disruptions mean the impacts will be long lasting and widely felt, regardless of a short, medium or long-term resolution to the war. Once production volume or capacity is lost, it is much harder to recover.

To stem already baked-in losses and protect Australian consumers from further reductions in the supply of Australian-grown vegetables, it is critical growers are provided with much-needed assurances from government of their status as an essential sector, and details on how they will be prioritised for access to critical inputs.

Just as Australian vegetable growers are committed to growing and harvesting the critical, fresh and healthy vegetables that feed Australians, all buyers of growers' produce have a critical role and duty to protect Australia's food security.

In ongoing engagements with major retailers and supply chain stakeholders, AUSVEG continues to emphasise that all fresh produce buyers have an obligation to consider genuine, evidence-based price increase requests from growers in good faith.

To best make their case, it is important growers are able to differentiate, quantify and convey the impact of recent conflict-related increases on their cost base, to provide evidence-based, credible requests for price increases for their produce.

Advice for growers
If you have not already done so, it is strongly recommended growers commence discussions with their customers as a matter of priority about the impacts recent input and service cost increases are having on your business. The below should be key considerations.

Growers are advised to prepare and provide relevant information and evidence that supports the case for a price increase.

Growers are advised to prepare and provide relevant information and evidence that supports the case for a price increase.

Requests for price increases should be realistic and based on evidence to enhance the prospect of success. If you feel that your issues are not being adequately addressed in negotiations with your buyer, growers should escalate concerns to a category manager, or someone more senior in the organisation.

Growers are encouraged to have conversations with their customers about possible efficiencies, such as increasing the number of items per unit (i.e crate), which may assist in offsetting some additional freight costs.

For growers supplying retailers
If growers feel that discussions with retailers are not occurring in good faith, and potentially in breach of the Food and Grocery Code, we encourage you to reach out to the relevant Code Mediators. Contact details for relevant Code Mediators for each of the major retailers, as well as more details on the complaints process are available on the Food and Grocery Code Supervisor website.

For growers supplying wholesalers
The Horticulture Code of Conduct requires a written Horticulture Produce Agreement (HPA), in compliance with the Code, to be in place between growers and traders. Growers who feel that discussions with wholesale traders are not occurring in good faith, and potentially in breach of the Horticulture Code, are encouraged to refer to their HPA. Further information on dispute resolution under the Horticulture Code is available on the ACCC website.

Requests for confidential business data from buyers
In providing evidence to customers either to support price increase requests, or in response to requests for further information, growers are encouraged to be mindful of their own privileged business information, and any confidentiality agreements in place with their own suppliers. Growers have rights and protections under the Food and Grocery and Horticulture Codes, and any growers feeling undue pressure to provide confidential information should raise these concerns with the relevant Food and Grocery Code mediator, or through the Horticulture Code disputes process.