Australian vegetable growers face plunging prices for produce

A new report published
today by the Australian Bureau of Agricultural and Resource Economics and
Sciences (ABARES) shows that Australia’s domestic vegetable prices were 6 per
cent lower on average in 2014-15.

The report, entitled Australian
vegetable growing farm businesses, an economic survey, 2013-14 and 2014-15,
was commissioned by Horticulture Innovation Australia using the National
Vegetable Levy and funds from the Australian Government. The survey results are
used to provide both industry and government with information about farm-level
production and financial stability.

“Australian vegetable growers faced increased hardship in the 2014-15 season,
with lower prices received for their produce translating into much tighter
margins,” said AUSVEG Deputy CEO Andrew White.

AUSVEG is the leading horticultural body representing over 9,000 Australian
vegetable and potato growers.

“The decrease in vegetable prices comes at a time when the costs of production
have also increased by an average of 4 per cent since 2012-13. Decreases in the
prices received for produce coupled with the increase in average farm costs
have reduced grower’s margins and cash flow considerably,” said Mr White.

“Capital investment and productivity are particularly important this year given
increasing production costs affecting growers’ bottom line. Vegetable growers
simply do not have the cash on hand to support increased industry growth and
productivity.”

The report indicates that average vegetable farm costs were $640,000 per farm
in 2014-15 in comparison to $614,090 in the 2012-13 financial year.
Furthermore, cash receipts from vegetable sales have fallen by 7.8 per cent
from $774,900 in 2013-14 to $714,000 in 2014-15.

“Smaller sized farms tend to be the hardest hit by tighter margins as they
generally have less liquidity on hand, therefore making it more difficult to
obtain loans from financial institutions due to an increased perceived risk.
Less access to funds means that growers are much less likely to be able to
invest in future capital projects,” said Mr White.

“The effect of these financial difficulties is likely to have been a factor in
the 24 per cent drop in the number of small vegetable farms within Australia in
2014-15. Small business confidence is also much lower, with 21 per cent of
existing small vegetable growers indicating that they are likely to exit the
market completely next year.”

The AUSVEG Economics program is funded by Horticulture Innovation Australia
using the National Vegetable Levy and funds from the Australian Government.