Flooding along the Murray River and a wet, cold spring have reduced vegetable crop yields and delayed harvests, contributing to food prices growing at their fastest annual pace during the September quarter in 16 years.
The last time food prices rose so rapidly was in 2006, when Cyclone Larry wiped out the Queensland banana crop.
According to the national commodity forecaster ABARES, prices for fruit and vegetables are set to keep rising until they peak in mid-December.
Melbourne-based wholesaler Michael Piccolo said even the pantry staple — onions — had not been spared as recent flooding inundated farms.
"Onions have probably risen 200 per cent in the past month. We usually purchase them at this time of year at $7 for a 10kg bag — now we're paying close to $20," he said.
"We're seeing with our onions, red onions, capsicums, eggplants, and watermelon, because it is grown in Mildura at this time of year, the prices are rising."
However, Mr Piccolo said, as local prices rose, imports had become more competitive.
"We are starting to see a lot of Californian onions coming though, red onions, and we're actually seeing them come from Holland as well, so these countries come in and fill gaps until we start to see more of our local produce come online."
Big wet not damaging exports
Meanwhile, the La Niña-driven wet weather has not dampened the value of Australia's agricultural produce overseas, with ABARES predicting that exports of farm products will hit a record-breaking $72 billion this financial year.
A combination of high prices for crops such as wheat, barley, and canola and bumper production last harvest has seen $5 billion worth of agricultural exports sold every month since November 2021, with wheat alone accounting for $1 billion a month.
"We managed to get a lot of product out, the pace of our exports is at its peak level," ABARES executive director Jared Greenville said.
"Overseas countries and other buyers have turned to Australia to be a really reliable producer of food, and that's been one of the reasons why we've seen such high demand for exports," Dr Greenville said.
The gross value of all Australia's farm products is forecast to come in at $85 billion, less than the record-setting value posted in the 2021–22 season.
It is expected the widespread flooding on the east coast will see 16 per cent of the New South Wales crop abandoned, 7 per cent in Victoria, and 5 per cent in Queensland.
ABARES has revised its grain production estimates for NSW down by 2 million tonnes since its September estimate.
But conditions for Western Australian and South Australian grain growers have been favourable enough to make up for the losses, with total grain production estimated to hit 62 million tonnes, the second-highest crop on record.
However, despite the high prices, this season farmers have paid much higher prices for essential inputs such as fuel, fertiliser, and agrochemicals.
"We're seeing a real squeeze occurring," Dr Greenville said.
"Last year we saw some record levels of farm profits across the country, but based off what we're observing with fertiliser prices, we're expecting to see profits squeezed quite a lot."
Since June 2021, prices for fertiliser have risen more than 100 per cent, while chemicals have risen by 30 per cent.
