lettuce – Michmutters

After months of paying $10 for lettuce, shoppers can expect some relief with Queensland growers getting back on track, three months after they were devastated by flooding.

Prices for the salad staple skyrocketed after flooding in May wiped out millions of dollars worth of vegetables in the Lockyer Valley, west of Brisbane.

Mulgowie Yowie Salads director Shannon Moss said he had only started full production about two weeks ago.

“We’ve had nice weather where a lot of growers have got stock coming on,” Mr Moss said.

“I was going through the photos [of the flooding] and I’m thinking how it’s hard to look at it, look at the devastation that was here.

“It is nice to see the paddocks recover and the farm get back into some sort of normality.”

Mr Moss said he was now producing about 30,000 cos lettuces a week for markets in Sydney, Melbourne and Brisbane.

Rows of lettuce wiped out from floods with the scenery of the lockyer valley in the background — Shannon Moss lost his entire lettuce crop in May when floods ripped through the Lockyer Valley. (Supplied: Shannon Moss)

He said prices had remained high for so long because the season had had to start from scratch.

“You have to remember a seedling in a nursery takes about four to six weeks to grow, then it’s another eight weeks in the ground to grow lettuce.

“So you’re looking at three to four months to grow any kind of lettuce.”

Man in fluro orange shirt stands in front of rows of lettuce. — After the trauma of floods, Mr Moss is happy to get back to normal production. (Rural ABC: Lucy Cooper)

Further price drop expected

Toowoomba-based greengrocer Bevan Betros said prices had halved in recent weeks.

“I think we can afford to eat iceberg lettuce again … they are a good size, they’ve got a bit of weight in them — they’re very good value again,” Mr Betros said.

He said prices would remain stable over the coming weeks.

“I don’t think they’ll get much cheaper just for the next week or two.

“There may be some gaps in the plantings due to the floods and what people were able to do when they could get on and off their property.”

Man stars at camera with shopping shelves behind him — Greengrocer Bevan Betros expects iceberg lettuce to drop to about $2 by September. (ABC News: David Chen)

Mr Betros said he expected prices would continue to fall heading into October.

“They’ll get back down as the warm weather comes on, as we get into spring.

“We should be getting down under $2 again, hopefully in September.”

Iceberg lettuce on shelf in supermarket with a price of $6.20 — Iceberg lettuce has fluctuated from $1.50 a head to $12 and is now $6 a head. (ABC News: David Chen)

But don’t get used to it

Despite lettuce production returning to normal, shoppers are being warned not to get used to low prices.

Director of Coastal Hydroponics on the Gold Coast and Growcom chairwoman Belinda Frentz said a price reduction would likely be short term.

“We’ll start seeing the prices of most leafies coming back to what we would expect to be a normal sort of price,” Ms Frentz said.

Woman stands with arms crossed and lettuce growing behind her — Growcom chair Belinda Frentz says production is almost at full capacity. (ABC News: Steve Keen)

“Obviously we’ve got input cost pressures that are having a significant impact on businesses and recouping costs and seeing prices sort of not leveling out — there’s going to be some increases.”

Ms Frentz said farmers were still dealing with high labour, fuel and fertilizer costs.

“Growers are being hit in every pocket that they’ve got.”

Is there a right price?

While prices have dropped, growers want them to remain at levels where their businesses can survive.

“If we get down to $1.50 for retail lettuce that’s not going to be sustainable for too long,” Mr Moss said.

“You know, fuel levies are up 20 to 25 per cent, fertilizer prices are up another 25 to 30 per cent and diesel is up another 30 to 40 per cent, so our product needs to be up around 30 to 40 per cent,” he said.

Hand holds a plastic packaged cos lettuce — Lockyer Valley growers supply the key markets of Brisbane, Sydney and Melbourne.(Rural ABC: Lucy Cooper)

Ms Frentz hoped the severity of the losses endured by farmers during the floods would demonstrate to consumers how exposed the industry was.

Lettuces have crossed the $10 mark, milk prices are being bumped up by the major supermarkets and strawberries are $6 a punnet.

Nearly everywhere you look, the price of food and other farmed goods is on the rise.

You would be forgiven for thinking this must be a great time for Australian farmers, preferably while gazing out the window at gentle rain.

Not remove.

Prices on the rise

Understanding what’s driving the price of any commodity can be a mind-bending exercise at the best of times.

The current situation is broadly due to a number of issues, the first of which has to do with the nature of the Australian growing season.

Australian vegetables come from different parts of the country depending on season. At the moment the primary supplier is Queensland.

Earlier this year some of its growing regions were smashed by two floods in 11 weeks.

Flooding of field at Mulgowie School Road in Lockyer Valley showing brown flood water through a field — Queensland’s Lockyer Valley flooded earlier this year and destroyed large vegetable crops.(Supplied: Lockyer Valley Regional Council)

Belinda Frentz is a herb grower on the state’s Gold Coast and deputy chair of Australia’s peak body representing vegetable growers, AUSVEG.

She said the damage to crops caused already high prices to climb even further.

“When you get a loss of that magnitude, it’s not the price that’s significant, it’s the production loss that’s associated with that,” Ms Frentz said.

“Anything that increases in price is usually associated with a loss somewhere in the supply chain.

“When we’re processing less than half of the volumes that we usually would, obviously the demand for that product increases exponentially and there’s just not the availability of the products.”

Farmers with hidden costs

Like every industry, farming has costs. There are start-up costs, such as the price of crop seed for the year, the cost of land, or the price of buying livestock.

Then there are input costs, things like fertilizer, fuel, chemicals, water and labour.

In short, they are the products necessary to do business — similar to fixed costs for personal budgets, such as rent and electricity.

These costs fluctuate naturally, but recent world events have thrown a spanner into the works.

small white urea pellets spill form an augur into a large trailer as a woman watches from the side — Common fertilizer, urea, jumped from $750 a tonne in 2021 to $1,300 in 2022.(Rural ABC: Clint Jasper)

Fertilizer costs began to spike in mid-2021 when China announced restrictions on exports, but the war in Ukraine has driven that price even higher.

The price of fuel has also been abnormally high, particularly for diesel, which is not just used in tractors, but also fuels the trucks that haul produce from the farm to processors, wholesalers and supermarkets.

The ongoing global hangover from the pandemic has also slowed Australian imports of these commodities to a crawl.

Creating a perfect storm

While each of these costs may have been manageable on their own, together they have created a perfect storm.

Ms Frentz said the costs were eating into what little profits many producers were making.

“We all know what our costs of production are and we know that they’ve increased,” she said.

Woman kneels down amongst rows of green and red lettuce. She smiles at the camera holding loose lettuce leaves in her hands. — Belinda Frentz says flood damage to crops caused already high prices to climb further.(Supplied: Belinda Frentz)

“I think the new pricing of fresh [food] will be around the input pressure costs that we’ve got, and that we can’t do anything about.

“Like everybody at the moment under household pressures about the cost of living, growers are experiencing that across the board.

“For us to be sustainable, we have to be profitable.”

A tale of two growers

But with prices so high, how much of that money is actually making it back into the pockets of growers?

Melbourne-based wholesaler Michael Piccolo believed the situation had divided growers into two distinct groups.

“You’ll get a certain grower that doesn’t have the yield, so basically whatever they’re producing is only covering the cost of production,” Mr Piccolo said.

“Then you’ll have a grower who has a full crop and they just base their sales on what’s going on around the Australian market.

A man is standing in front of a sign that says Piccolo Fresh — Melbourne vegetable wholesaler Michael Piccolo believes the market is over inflated.(Supplied: Michael Piccolo)

“Certain markets like Melbourne, Brisbane and Sydney will compete against each other, so when one sets a price, everyone else has to follow suit.”

Mr Piccolo also believes that, while input costs are a large part of current costs, it is competitive bidding from buyers that is driving up prices.

“I think it’s a contributing factor. My opinion, though, is that it’s a bit too inflated and we’re about 20-30 per cent above where we really need to be.”

When will prices come down?

The good news is that relief is on the horizon.

Mr Piccolo believes prices will fall as the season shifts away from Queensland growers and back towards those in southern Australia.

“The changeover of seasons happens around September to October, so a lot of these products that we have to purchase from Queensland start to come down during the Victorian season,” he said.

“My prediction is that we’ll start to see prices reduce more towards the mid-to-end of September, and then the Victorian growing season will kick in.

“However, I can’t see it making it’s way back down to the prices we’ve gotten used to,

“I think it will probably settle around at 10 to 20 per cent above what we are traditionally used to pay.”

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