Vegetable farmers in Australia struggling with rising costs

AUSTRALIAN vegetable farmers are battling rising labour and energy costs as they compete in a global market.

AusVeg chief executive officer James Whiteside said keeping costs under control was an issue for the whole industry because Australian farmers risked losing “global competitiveness.”

“It’s very important at a time when we’re trying to access global markets,” he said.

Mr Whiteside’s comments come as the Australian Bureau of Agriculture and Resource Economics and Sciences released its “Farm financial performance — vegetable growing farms report yesterday.

The report shows that while farm receipts have risen, so too have costs, leaving farm incomes mostly stagnant.

However, ABARES estimates the average farm cash income for vegetable growers for the 2016-17 financial year will be the highest in real terms since the survey began in 2007.

ABARES senior economist Dale Ashton said the lift was due to increases in production for the past two financial years, combined with higher prices.

“The average vegie farm income across Australia for the past decade is $200,000 and we forecast that to lift to $266,000 for the 2016-17 financial year,” Mr Ashton said.

He said cash costs had risen on farm in line with cash receipts for the past decade.

“As farmers produce a bigger cop they get higher receipts, but costs go up,” he said.

“They move together so income is flat.”

Victorian Farmers Federation horticulture group vice- president James Terry said all farm costs were increasing, with margins becoming increasingly tight.

“Farmers are not realising the same level of increase in their sale price and that’s due to large periods of the year for the majority of fruit and vegetables there is (an) oversupply on the market,” he said.

Australian Table Grape Association chairman Richard Lomman said consumers could expect to see a rise in fruit and vegetable prices, as the costs of labour and production had increased.

“If we don’t accept there will be an increase in price, we’ll be relying on corporate farms and imports to meet consumer demand,” he said.

Mr Ashton said the level of investment in vegetable farms painted a positive picture.

He said investments of $271 million for the 2016-17 financial year included land, plant and equipment.

“Vegie growers are still investing a lot back into the industry as they are hopeful of future production,” he said.

Mr Whiteside said while vegetable growers were positive about the future, the investment was mostly on the larger farms.

“The big guys are doing well,” he said.

Mr Whiteside said it was a concern to see the proportion of farms recording a negative farm business profit was still 50-60 per cent.

“Some farms are doing really well but there is a long tail that is really struggling,” he said.

“It means year on year they do not have fresh cashflow for investment.”

The ABARES report said the proportion is expected to drop to 54 per cent from the 10-year average of 60 per cent.

He said individual farm receipts depended on the mix of vegetables grown with higher receipts for lettuce, carrots and Asian vegetables, and lower receipts for potatoes.

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