Costs up on all fronts

COSTS UP

ON ALL FRONTS

Glenys Christian

Pukekohe vegetable growers are in a position they’ve never been in before, with fertiliser, fuel and labour costs the highest they have been in three years1 .

“Our biggest concern is the cost of growing,” says Pukekohe grower, Bharat Jivan. “Greens are difficult because once they’re ready you’ve got to harvest them, and you’re not even sure whether you’re going to get a return on them.”

Covid-19 has added additional costs to growers’ operations this year, with sick employees unable to turn up for work and businesses needing to add PPE (personal protective equipment), among other things, to their expense list. Bharat says Pukekohe growers continue to be short of both permanent and casual workers, and that growers are just trying to keep up with crop harvesting. Finding local labour hasn’t been easy and the backpackers they would usually employ haven’t been in the country either. While backpackers will be able to return later this year, they might choose to go to Australia where a horticultural work visa is available and pay rates are higher. A shortage in fertiliser supplies coupled with fertiliser price increases is also hitting Pukekohe growers hard. “We bought fertiliser ahead, but we’re going to have to buy for the coming season and we’re told prices could keep going up,” says Bharat. In response, some growers may try to scale back on crops that use a lot of fertiliser.

“We might look at cereals which don’t use so much fertiliser, instead of growing potatoes and onions,” Bharat says. Diesel and petrol cost increases are affecting growers too, with not a lot that can be done to reduce this expense. To top it off, Pukekohe experienced an unprecedentedly dry summer and autumn, adding the cost of needing to irrigate to offset conditions. Irrigating late in the season has also left some growers concerned about water rights, which ran out at the end of May. Cooler temperatures around the middle of May had not been accompanied by rain, which saw reductions in potato and onion yields too.¹ “There is less revenue coming in to offset increased costs,” Bharat says. “The real impact will come through in winter when growers are planning for their next crop. That’s a real worry.” Howe Young, who started growing in 1966, recently harvested pumpkins where 45 percent of the crop had to be thrown away due to damage from caterpillars which were loving the dry, warm field conditions. His biggest concern is that he believes there’s no way the increased costs can be recouped. “We’re price-takers — there’s no doubt about that.” Howe says there is little growers can do about increased costs.

“If we don’t use fertiliser, we don’t get a crop and if we don’t use sprays, supermarkets might not take our produce because consumers don’t like holes in their vegetables,” he says. While supermarkets’ winter price freeze on pumpkin, carrots, onions and frozen mixed vegetables is good news for consumers, Howe believes retail margins will still stay the same. Growers say the only two ways supermarkets could achieve a price freeze is by holding down supplier prices or reducing their margins. “Most people are more cost conscious,” he says. “But when they see high prices for vegetables, they think growers are making a lot of money.” Howe would like to see the Commerce Commission’s report into the supermarket sector followed up by the establishment of a grocery ombudsman and a mandatory code of conduct for growers put in place. Bharat says growers recognise the ceiling to the prices consumers would pay for vegetables. “It’s a real dilemma. I don’t think anything much can be done. The whole world is in the same situation with inflation. We are living in difficult times. “If they [supermarkets] want to honour their statements, they should cut their margins because of suppliers being under the pump at the moment.” Growers are just trying to get through this season, he says.

1 Statistics New Zealand data