Dr Jacqueline Rowarth: The problem with cheap tomatoes

Photo / File

Opinion: While cheap tomatoes may be good news for consumers, the benefits for growers are yet to be seen, Dr Jacqueline Rowarth says.

Tomatoes being sold for 9c/kg in Hastings hit the news in the second week of March, only to be beaten by 8c/kg in Auckland the following day.

The reason for the low price was a glut caused by, at least in part, inability to export to Australia and the Pacific Islands. Shortage in freight space meant the cost of transport escalated and the tomatoes could not then be sold in the overseas markets at a price that would cover the costs.

This is basic economics of supply and demand: surplus leads to decreased prices, shortages result in increased prices.

But it is an ill wind that blows nobody any good.

Consumers benefitted from the surplus while supermarkets and growers took the economic hit from shortage of freight space. Supermarkets, however, were able to use the tomatoes as a loss leader – encouraging people to visit the store and 'while they were there' they might buy other things.

Benefits to the growers have yet to emerge.

The primary producers of the world sell at wholesale prices but buy at retail. Every increase in minimum wage or change in environmental expectation results in more outlay from their business but mostly without a consequent increase in income.

In the last 20 years, food price to the consumer has increased by 55 per cent (a basket of goods costing $100 would now cost $155), but wages have increased by 89 per cent.

Primary producers pay wages. Many also provide housing, the costs of which have escalated even faster than wages.

The Food Price Index for February (released in March) reported that food prices increased by 1.2 per cent in the year ended February 2021.

Compared with February 2020, fruit and vegetable prices increased 5.1 per cent (wages and difficulties due to Covid-19 and crop management). Restaurant meals and ready-to-eat food prices increased 3.7 per cent, impacted by wages and property.

But 1.2 per cent in New Zealand is nothing in comparison with what has happened globally.

The United Nations' Food and Agriculture Organisation (FAO) has reported that global food prices reached a six-year high in December, jumping 18 per cent since May 2020.

The FAO predicted that food prices would keep rising into 2021, "adding to pressure on household budgets while hunger surges around the world".

Drought, fire, flood, war, Covid-19 disrupting supply chains, and government efforts to support biofuel and domestic food producers (in the northern hemisphere in particular – the USA support amounted to 40 per cent of farmer incomes during 2020) have devastated and distorted production.

Listen to Jamie Mackay interview Dr Jacqueline Rowarth on The Country below:

Head of the World Food Programme, and 2020 recipient of the Nobel Peace Prize on behalf of the WFO, David Beasley, has warned that the world is "on the brink of a hunger pandemic".

The Global Food Security Index released in February supports the concerns. The index measures 59 factors on the state of food affordability, availability, quality, safety and natural resources and resilience in 113 countries.

Authors concluded that food security is deteriorating in the face of climate change and political unrest.

Finland came top in the latest index, followed by Ireland and the Netherlands. New Zealand ranked 13th equal with Germany and was commended as having a strong commitment to agriculture-related climate exposure and natural resource management under the Nationally Determined Contributions (Paris Agreement). This refers to New Zealand's commitment to reduce greenhouse gas emissions by 30 per cent below 2005 levels by 2030.

For the index, food supply is the priority. It is for the Paris Agreement, too, with a stated collective aim to "limit temperature rise from climate change, while recognising the importance of food production and food security as a fundamental priority".

Paraphrasing – do what you can to reduce greenhouse gases without impacting food supply.

Recently released research has shown that New Zealand dairy farmers lead the world in fewest GHG per kilogram of milk solids.

Dr Jacqueline Rowarth. Photo / Supplied

When the dairy and beef industries work together, the GHG and nitrogen footprint for meat are also lower than other countries can achieve.

Given New Zealand's success in producing efficiently produced animal protein and exporting it to other countries, it might be a surprise that we rank only 13th in food security.

It might also be a surprise (but is part of the explanation) that we import a considerable quantity of food hence decreasing apparent security – bananas, pineapples, grapes, out of season fruit and vegetables, chocolate, sugar, coffee, bread wheat (for the North Island), rice, lentils, chickpeas, most biscuits, crackers, muesli bars and many breakfast cereals. Tomatoes are also imported at some times of the year.

Farmers and growers in New Zealand are doing what the world wants – producing good food while minimising impact on the environment.

The real challenge globally is the ever-increasing number of people. The real challenge in New Zealand is ensuring that the young want to enter the agricultural professions and do an even better job than their parents.

We need to applaud and reward their efforts in sustainable food production.

Prices of 8c a kg won't do it – a tweet in response to the news "we need to look after our farmers and pay them a fair price" was spot on.

• Dr Jacqueline Rowarth, Adjunct Professor Lincoln University, is a farmer-elected director of DairyNZ and Ravensdown. The analysis and conclusions above are her own. jsrowarth@gmail.com