Queensland growers brace for more crop losses

HALF a billion dollars worth of sugar cane is at risk as Cyclone Yasi bears down on far north Queensland.

Banana growers could suffer the same catastrophic losses they endured in 2006 during Cyclone Larry.

Such devastation when Cyclone Yasi hits land later on Wednesday would come on top of the $500 to $600 million of lost agricultural production from the summer floods.

The National Farmers Federation says 92 per cent of Australia's sugar cane is produced in Queensland, and its projected losses from Cyclone Yasi do not include likely damage to roads, rail, houses, mills and ports.

Aside from sugar and bananas, the region also ranks highly for the production of watermelons, mangoes, lychees, macadamia nuts and strawberries.

It is also a huge vegetable growing area, but the NFF, using data from its members, does not expect huge crop losses as summer is not the growing season.

Monthly inflation data released on Monday showed that the price of fruit and vegetables surged 12 per cent in January in the wake of the floods.

Reserve Bank governor Glenn Stevens said on Tuesday that the Queensland and Victoria floods will have a "temporary adverse effect" on prices and economic activity.

But as was the case with other natural disasters, the central bank will look through the estimated short term effects and continue to focus interest rate policy on the medium term outlook.

The Reserve Bank left the official cash rate unchanged following Tuesday's first board meeting of the year, and economists expect the central bank could keep rates on hold until at least May.

Commonwealth Securities economist Savanth Sebastian does not expect the feared spike in food prices following Cyclone Yasi and the floods to hit the entire grocery basket.

He said while food inflation is an issue in other parts of the world, it is still well contained in Australia.

Before the economic impact of the floods and cyclones set in, prices for nearly half the usual weekly grocery shop fell, according to new government data.

Meat eaters in particular would have enjoyed around a nine per cent drop in the price of their rump steak and roast beef during the final three months of last year compared to the September quarter.

Breakfast cereal, cheese and sugar were also down in price on average.

"The floods in Queensland, together with Cyclone Yasi, will lead to price rises for a select number of fruit and vegetable products, but the price increases are unlikely to be broad based," Mr Sebastian said in an analysis of Australian Bureau of Statistics figures on Wednesday.

The data showed prices of 23 of the 51 grocery items the bureau monitors in each capital city fell in the December quarter, before the floods .

This compares with the September quarter when the price of 19 items fell.

Over the year, 13 grocery goods were cheaper - including a 32 per cent drop in bananas - compared with 11 products in the 12 months to September.

Still, oranges were up 25 per cent and tomatoes rose 20 per cent over 2010.