Wednesday, July 26, 2006

Bananas drive up Australian CPI

Echoing Paul Keating's famous line about Australia becoming a banana republic, the soaring costs of the fruit have directly contributed to increases in the June quarter CPI figures released today. The Treasurer announced a 1.6% quarterly increase but still talked down the prospect of an August increase in the cash rate (yeah right).

Fruit, particularly bananas, contributed 52% of the increase, and fuel 11.2%.

The price hike on bananas is down to cyclones in Queensland in March this year which devastated production. In 2005, Australia produced 20 million plus cartons of bananas, something like 270 000 tonnes, worth AU$320-350 million but this is less than half of one percent of total bananas grown worldwide... (crasster links to this report on the global trade of bananas).

So you'd think that even in domestic production was down, imports should be reasonably priced? Maybe you could still buy a 'nana for under a dollar; fuhgeddaboutit. More like $2.16 each (Coles online Wed 26th).

Why so damned expensive? Australia bans all banana imports on the basis of the risk of "infestation". Bollocks. It is one of the many dubious non-tarriff trade protections applied to agricultural products by federal Liberal/National coalition government as a sinicure for their supporters.

So when your mortgage payments go up in August, remember that it's for a good cause; it's keeping uncompetitive Liberal/National party donors in business.

6 comments:

crasster said...

Coincidentally, just heard an Aussie economist talking about the big blip in the Australian CPI caused, in part, by the skyrocketing cost of bananas. She quoted some figure of wholesale prices rising from something like $1 to $2 a kilo to more than $12 a kilo. That's a pretty big change in price.

backin15 said...

yeah, breakfast at our place has become an expensive affair...

iiq374 said...

That is a pretty insane price for a bannana! The wonders of protected economies eh? :D

backin15 said...

Australia has a number of tariff and non-tariff trade barriers and the various import bans on fruit are pretty clearly about protecting domestic production. I'm not entirely opposed to trade restrictions but when they designed simply to allow unproductive and unsustainable businesses to continue... subsidies and the like paid to sugar producers or the tariffs on ethanol are other examples.

Dave G said...

I bought bananaa for 99c a kilo in NZ last week and with our weather we're certainly not growing them.

backin15 said...

99c, that'd half the breakfast bill at mine!