Floods to cost Australian agriculture US$2.48B
The National Australia Bank (NAB) report estimates flooding in the state of Queensland will cost US$2.48 billion in lost farm production in 2010-11.
In the bank’s January Rural Commodities Wrap, economist Michael Creed said a range of agricultural sectors would be affected, but one of the largest impacts would be on horticultural production.
“One of the largest impacts in both a production sense, and in terms of the broader economy is likely to emanate from the impact of flooding on Queensland’s horticultural production,” he said.
In particular, melons appear to be hardest hit, with reports from Chinchilla of thousands of rockmelons being washed out from the ground.
“Other products to be affected include mangoes, salad vegetables including cucumbers and celery, citrus and sweet potatoes. This is expected to exert significant pressure on food prices.”
Creed cited the effects of Cyclone Larry in 2006 as an example of how such a disaster could trigger food price hikes, but in this case the impacts were more broad-based.
"Given that horticultural production in Queensland typically accounts for between 20 to 30 per cent of national production, we can certainly expect a spike in consumer prices for fruit and vegetables in the coming quarters," he said.
"As an indication, the effects of Cyclone Larry on the banana crop back in 2006 saw a spike in the price of the Fruit & Vegetables component of CPI (Consumer Price Index) of around 30 per cent, so a spike of similar magnitude could be expected in the near term.
"As opposed to Cyclone Larry, however, there are more factors at play this time around. In particular, the impact on food price inflation is likely to be more broad-based, with a large proportion of the fruit and vegetable basket of the CPI being affected."