Increasing cost of imports helps push up food prices

The rising costs of input commodities in the initial months of 2022 are a large contributor to high domestic food prices, Stats NZ said today.

Imports of petroleum and petroleum products, needed to fuel the domestic food supply chain, have increased 81 percent across January and February 2022, when compared to the same period in 2021. Less visible, but equally important to production, the same period has seen large increases in the imports of food wastes (used as animal fodder), up 39 percent; fertilisers, up 161 percent; and mechanical machinery (used in sectors related to food production), up 14 percent.

While there have been increases in the volume of these imported commodities, rising prices have been the main drivers of the year-on-year increases. For example, the price per litre of imported diesel fuel has risen 58 percent from $0.66 in February 2021 to $1.04 in February 2022. The price per kilogram of nitrogen fertilisers has increased 133 percent, from $0.43 to $0.99 and potassium fertilisers has increased 127 percent to $1.07 during the same period.

“Rising supermarket bills for Kiwi families have become a hot topic around both boardroom tables and dinner tables lately. There are many possible contributing factors, such as supply chain constraints, labour costs, and the high prices producers are achieving in export markets. Another large contributor is the rising cost of food production” international trade manager Alasdair Allen said today.

The second-largest food import category during the same period was beverages, which rose 26 percent from $95 million in 2021 to $120 million in 2022.

Cereals imports totalled $107 million, up 51 percent from last year. Wheat and maize (corn) saw a sharp increase in unit prices, with wheat up 44 percent and maize up 45 percent.

Preparations of milk, cereals, flour and starch imports were valued at $86 million, an increase of 12 percent from last year.

The value of imported fruits and nuts was $65 million, up 10 percent. This rise was mainly driven by the imports of bananas (fresh and dried), valued at $16 million in January and February 2022, up 23 percent. Banana unit prices were also up 5.7 percent.