Substantial pricing and input pressures on vegetable growers have persisted throughout 2026, while increases in the costs of producing vegetables have not been reflected in retail prices, according to AUSVEG.
According to the national peak industry body, the commencement of the Middle East conflict at the end of February had an immediate and severe impact on vegetable growers, as concerns over the availability of critical inputs like fuel, fertiliser and freight caused those costs to surge, while also making almost every aspect of commercial vegetable production more expensive.
AUSVEG’s most recent survey of growers measuring the conflict’s impacts in May showed growers' diesel costs had increased by a median of 61 per cent, fuel surcharges on freight were averaging more than 35 per cent, fertiliser costs had increased by a median of 51 per cent, and overall production costs were up by an average of 28 per cent, and as much as 79 per cent for some growers, compared to before the conflict started.
Growers in May reported they had only been able to recover an average 17 per cent of recent production cost increases from their customers.
While it has been reported more recently that some commercial buyers have agreed to some requests for more viable returns from growers, where these have been achieved, they are unlikely to have covered the full extent of recent production cost increases.
Despite escalated production costs for growers, there hasn’t been a corresponding increase in vegetable prices at the checkout. The ABS’s annual inflation figures for June show CPI for vegetables fell 4.2 per cent compared to an overall increase in annual inflation of 3.8 per cent over the same period.
Even though vegetables have remained great value for consumers in a continuing cost-of-living crisis, many growers also continue to report diminished demand.
While June and early July saw some moderation in the cost of critical inputs compared to highs experienced in the initial stages of the conflict, production costs have remained high as impacts have continued to flow through the supply chain.
Major new additional costs for growers have also come online, in the form of the 4.75 per cent increase to the minimum award wage from 1 July 2026.
Significant new questions regarding the availability and future cost of critical inputs have also emerged, following the recent re-escalation of hostilities in the Middle East, and an uptick in the price of critical inputs like fuel.
Ongoing volatility, many unknowns regarding the likelihood of a lasting resolution to the conflict, and a range of domestic pressures continue to create an uncertain business and operating environment, warns AUSVEG.
That uncertainty remains a major challenge across the vegetable industry, as well as the wider economy.
The Australian Industry Group’s July Industry Index shows, business uncertainty – particularly over energy and industrial prices – remains the greatest risk from the crisis. With global energy prices rising again in recent weeks, future uncertainty risks remain elevated.
