Source: Radio New Zealand
RNZ
Shoppers will take another hit when the impact of the Iran war hits the supermarket shelves, a Foodstuffs boss says.
Households have already been feeling the pressure over the last year as shown by the release of new Stats NZ data.
Prices were up 4.5 percent on an annual basis in February, with mince up 23.2 percent, and sirloin steak 21.5 percent.
There have been warnings that the cost of food may rise further as producer and transportation costs increase, due to the Middle East conflict.
Foodstuffs North Island chief executive Chris Quin said before the Middle East war, two factors were driving prices up despite a drop in inflation.
New Zealand lived in a global economy and when export prices were strong, such as for red meat and fish, Kiwis had to pay more for them.
As well, bad weather hit fruit and vegetable growing.
Retail grocery prices went up around 3.7 percent, he said, which was lower than the overall 4.5 percent announced yesterday.
Supermarkets tried not to pass on all their costs and to manage their costs as efficiently as possible.
Asked if supermarkets were taking the same margin as a year ago, he said they were or were taking even less.
Regarding the Iran war, suppliers were talking about the pressure they were were under but it had not impacted on prices so far.
The cost of diesel was of particular concern both for transport and the impact it had on plastic products.
“It is unclear at this point how much of an impact it will have but it’s going to be very hard to suppress that impact depending on how long it lasts as well.”
The impact of the war was still to be felt on supermarket shelves.
“It’s a live conversation now but it’s not showing up on prices so far.”
There was no concern about getting supply as goods didn’t travel through the Strait of Hormuz, Quin said.
“It is unclear at this point how much of an impact it’s going to have.”
Quin expected that if there was fuel rationing the supermarket sector would be a priority.
He was happy with discussions underway with the government.
Fertiliser being applied on a farm. 123RF
Domestic food production a priority
The flow-on effects from the conflict in Iran are being felt by farmers.
Fuel prices are up, and the Middle East is also a major player in fertiliser trade, producing about 40 percent of the world’s nitrogen fertilisers.
That’s a double hit for arable farmers, who rely on fertiliser to grow crops and diesel to run their machinery.
Federated Farmers arable chairperson David Birkett said without a doubt food prices would increase due to the conflict’s impact.
Higher costs of processing and transport were the two key factors, he told Morning Report.
If there was to be any rationing of diesel, farmers should be among those on the priority list.
“Domestic food production should be given some level of prioritisation when it comes to fuel.”
The arable sector was the biggest user of diesel, Birkett said. Harvesting was almost finished and crops would then be resown.
“The diesel price has affected us straight away, which is quite interesting given that the government says we have six weeks’ supply on hand.
“Yet the price goes up instantaneous when the war starts so there’s obviously some cost recovery being done there from the fuel companies I’d imagine.”
If diesel was rationed, that would be “a real challenge” for farmers, especially arable farmers who needed to use machinery.
The two main fertiliser cooperatives have indicated they already have supply to last through autumn which meant settled prices for “a little bit”, Birkett said.
However, for the peak demand time of spring, farmers were already concerned about both supply and price.
He did not expect prices to rise as high as the pandemic when prices doubled after all production stopped.
“Time will tell I guess.”
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
