New Zealand produces enough food to feed 40 million people a year; so why do our groceries cost so much to buy here in New Zealand?
According to Statistics New Zealand our annual food prices rose by 5.9% from January 2021 to January 2022.
A recent Commerce Commission report said New Zealand had the fifth most-expensive food prices among 38 countries in the O.E.C.D.
There are many issues that have an impact on New Zealand’s high food prices which include; the minimum wage, biosecurity regulations, higher costs for packaging, transportation costs for imported foodstuffs, etc.
New Zealand produces enough to feed 40 million people and most gets exported. Given that those exports particularly dairy products and meat fetch higher prices overseas (many of them are at record levels), this creates pressure on the prices that we have to pay, as the price for the raw materials is the same at the farm gate, no matter where they are being sold.
As a result, global markets tend to set the price in New Zealand. If the local prices don’t match the export prices then the manufacturers will send their production offshore to gain the best return on their investment leaving New Zealand short of food.
The location of New Zealand also has an impact on grocery prices. Because we are so far away from most other production sites, the cost of importing products is high, and as the price of oil increases so do prices.
A supply shortage of ships and containers worldwide due to consumer demand since the pandemic began has driven up freight costs, with the cost of shipping goods to New Zealand increasing by 500 per cent in the past year.
All of these costs have to be included in the prices of imported goods which create upward pressure on the prices we pay.
Bad weather; diseases and wars all impact on global food costs and the world has had to deal with all three this past twelve months. According to the Food and Agriculture Organisation of the United Nations’ food price index, the international prices of a basket of food commodities in February had reached an all-time high.
This all-time high price index comes as a result of both the effects from the Covid 19 pandemic and also the war in Ukraine, and will put huge inflationary pressures on food pricing in New Zealand and on our ability to supply sufficient quantities.