Over the last few weeks grain prices have increased from a three month average of A$290 per tonne to a peak of A$492 per tonne on Monday, representing an increase of A$202 or 70 per cent.

An independent economic forecast indicates that the price of grain will persist at higher than average levels for some time, unless there is timely and sufficient rain or an increase in imports of grain from overseas. Furthermore, the Australian Bureau of Agricultural and Resource Economics (ABARE) has recently reviewed its winter crop forecast down by 30% on forecasts made in June.

The Australian Egg Corporation and Australian Pork Limited are therefore warning consumers that the cost of producing eggs and pork will increase in the short term and remain high for the foreseeable future, unless there is a substantial fall in the price of grain.

Egg, milk, pork and meat producers are being particularly hard hit due to the high dependence on grain for the production of these foods.

Just back from an international egg conference, James Kellaway, Managing Director of the Australian Egg Corporation said egg producers from all 56 countries in attendance were facing record grain prices due to failing crops world-wide, increasing demand for grain from the manufactured food sector and new competition from a rapidly emerging bio-fuels industry.

“Australian egg farmers have never seen grain prices reach these levels for such a sustained period,” Mr Kellaway said.

The recent spike in grain prices locally has resulted in the cost of producing a dozen eggs increase by up to 50 cents, or more than 20 per cent, over the last three months.

“The increase has cost egg producers an extra quarter of a million dollars over the last two weeks alone and there is no sign that these costs will abate over the short to medium term.

“Despite their best efforts at absorbing the rising cost of production, egg farmers exist on slender profit margins and unfortunately cannot continue to insulate consumers from the effects of this massive increase in grain prices any longer,” Mr Kellaway said.

Andrew Spencer, Chief Executive Officer of Australian Pork Limited agreed that the rising cost of grain is affecting many countries around the world, not just Australia.

“There is currently a global shortage of grain and we are seeing dramatic increases in the price of grain-dependent foods in the UK and across Europe. Extreme grain prices are contributing to the worst trading conditions in the pork industry in living memory. The leakage in producer profitability is simply a situation than cannot continue,” Mr Spencer said.