Domestic price of fruit

IBISWorld expects the domestic price of fruit to increase by 5.5% during 2024-25 to reach 121.9 index points. Inflation has remained high over 2024-25, placing upwards pressure on domestic fruit prices. This trend has also kept upstream purchase costs for fertiliser and other agricultural inputs elevated, with fruit farmers and wholesalers attempting to pass down costs through the supply chain. Industrywide labour shortages have also challenged supply levels of fruit. Many farmers have exited the industry, as supermarket buyer power has left many farmers under extreme financial stress, particularly as input costs have expanded. Low supply of fruits has forced up prices in the domestic market, as demand has outweighed supply.

Domestic retail prices of fruit are affected by two major factors: agricultural output and the retail trading landscape. Agricultural output is primarily a function of weather conditions. Farmers are at the mercy of rainfall, relying on rainfall occurring at the right time of year and in the right quantities to maximise production. While most farmers have irrigation systems, these systems still require adequate water supply in rivers and dams. The level of annual rainfall has fluctuated significantly over the past few years, making it difficult for farmers to maintain consistent output. When supplies of fruit are abundant, prices fall at the retail level. In contrast, shortages of fruit push prices upwards. Supply fluctuations have contributed to volatile domestic fruit prices in recent years.

The retail landscape has come under intensified media scope over the past few years. Major supermarkets, including Coles, Woolworths and Aldi, have been accused of unethical pricing strategies across many products, including fresh produce. In 2024-25, the ACCC begun an investigation into loss-leader marketing techniques that major supermarkets employ to entice their customers through selling fresh produce at a loss. The stark deviation between farmgate and retail sales prices has also come under media scrutiny, with many farmers becoming increasingly unhappy with their supply contract conditions. However, growing demand for Australian fruit from foreign markets has provided an alternative sales option, pushing up domestic prices in recent years. High prices for Australian fruit in foreign markets have incentivised some producers to sell fruit to export markets, rather than domestic markets. This production stream can limit local supply, increasing domestic fruit prices at the retail level. Overall, IBISWorld forecasts the domestic price of fruit to grow at a compound annual rate of 3.8% over the five years through 2024-25.