Cost of living inquiry hears from ag leaders on high supermarket food prices

Beef was of particular interest to the senators tasked with investigating the rise in everyday costs currently facing Australians, as retail prices show no sign of dropping despite the cattle market coming well off the boil this year and wholesale meat prices softening.

Supermarkets and butchers are believed to have absorbed a fair bit of the record cattle prices over the past two years in order to retain throughput on what is seen as one of the key grocery basket items for Australians.

That would indicate livestock price declines now are unlikely to flow through to the checkout.

However, Meat & Livestock Australia's managing director Jason Strong outlined a range of other complex contributors to the pricing of retail red meat at the Brisbane public hearing of the cost of living inquiry on Friday.

"This has been a hot topic in red meat sector for a long time," he said.

"In the past ten years we've seen a greater sophistication in the supply chain which means there is greater visibility of how product flows through but also greater connections right from the breeding side through to processing and the retail end."

Many of the players today were involved in downstream business - whether it was feedlots with interests in processing, breeders moving into feedlotting or branded beef programs.

"All that means there is a lot more visibility of both cost and value through the supply chain and I don't think there is opportunism happening," Mr Strong said.

ALSO SEE: Has beef become a luxury item?

He said the increase in the price of red meat at retail over time was related to increases in quality and consistency.

"One factor with red meat is the price becomes more notable when you consider more than 90 per cent of households are regularly eating beef and 75pc are eating lamb - how regularly it is used in diets and how important an item it is in our grocery baskets makes price rises more visible," he said.

The latest federal government food inflation data shows an overall lift of 9.2pc, with the red meat category only rising 8.2pc, Mr Strong reported.

"But when it's something you buy all the time, and not a cheap item, the perception is it has gone up more than other things, which is not right," he said,

Another contributing factor was that 75pc of Australia's red meat is exported and the growing affluence of overseas markets and increased access - Australia now ships to 100 different markets - has an 'underpinner' effect on domestic prices, Mr Strong explained.

Of course, skyrocketing costs of production on-farm are driving increased food prices across the board.

Queensland Farmers' Federation chief executive officer Jo Sheppard said producers have experienced fertiliser, fuel and electricity cost rises to the tune of 120pc in the past two years.

Overarching that is a workforce crisis, where not only have costs gone up significantly but the inability to source workers was now at the point where farmers were choosing not to plant this season, which Ms Sheppard described as 'an extraordinary situation'.

Whether higher retail prices go back to the farmgate often comes down to what sort of supply contract a farmer has in place, Ms Sheppard said.

"We are constantly working on the power imbalances that can occur when well-resourced corporations are negotiating contracts with small farmers," she said.

"We've seen not great examples in the chicken meat industry, and the dollar-a-litre milk is the big example."

Some producers have no element of flexibility in contracts, she said.

So, for example, when their crops are wiped out by floods, they have no safety net.

"Competition policy is important when you are thinking about cost of living," Ms Sheppard told the inquiry.

"So we'd like to see the ACCC (Australian Competition and Consumer Commission) better resourced because some of the frameworks they've put in place around trying to ensure farmers can negotiate fair terms are very important," she said.

"We've made positive steps but there is a lot more work to be done in this space."

ALSO READ: Big numbers of market-ready cattle unlikely to find a processor this year