A “perfect storm” of global conflict, surging energy costs, and domestic economic pressures is threatening food and grocery suppliers and manufacturers, the Australian Food and Grocery Council (AFGC) warns.
The AFGC has highlighted the unprecedented strain on the supply chains as the conflict in the Middle East causes fuel prices to soar.
The blockade at the Strait of Hormuz has resulted in skyrocketing Brent crude oil prices, up 39 per cent year-on-year to March. Container freight costs have also risen 22 per cent, amplifying landed costs across imported inputs, including packaging, fertilisers and finished goods.
Wheat, for example, is up 8 per cent year-on-year, while soybean oil prices up 52 per cent. Polyethylene prices are also up 6 per cent, placing pressure on packaging inputs.
In the fertiliser sector, urea prices have surged 67 per cent year-on-year, the AFGC added.
Amid these effects, combined with the recent interest rate hike, the council said suppliers can no longer weather soaring production costs alone.
“Retailers and suppliers cannot continue to swallow these increases without a long-lasting impact on our industry,” said Colm Maguire, CEO of AFGC.
“To protect jobs, livelihoods, farms, and to ensure the sustainability of Australian manufacturing, profitable operations are not a luxury; they are a necessity for Australia’s domestic sovereignty.”
The AFGC is working to educate consumers on how commodities such as oil dictate more than just transport costs.
According to the council, petroleum-based products are foundational to the industry, appearing in packaging, essential goods and manufacturing.
The AFGC is also committed to working with the entire industry to ensure the food and grocery sector remains a robust industry.
- Further reading: FAO warns global food prices will continue to increase if Iran war lasts.
