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The price of lemon peel is on the rise—and it’s not just because lemons are in high demand. Behind this unexpected spike is a deeper story tied to climate, supply chains, and the challenges facing Australian citrus growers. While it might seem like a niche ingredient, lemon peel plays a vital role in everything from tea blends to spice mixes, making its price surge a concern for many.

Australia’s citrus industry is a key player in both domestic markets and global exports, with lemons forming a significant part of that picture. In this blog, we’ll unpack what’s really happening to Australian lemons—and why it matters to producers, wholesalers, and everyday consumers alike.

The Price Spike: What’s Happening to Lemon Peel in Australia?

Lemon peel might seem like a byproduct, but it’s actually a sought-after ingredient across multiple industries. It’s used in everything from herbal tea blends and culinary spice mixes to natural cleaning products and zesty baked goods. Its bright aroma and concentrated citrus flavour make it a staple in both home kitchens and commercial operations. In recent years, demand for lemon peel has grown steadily, especially within the wellness and food industries focused on natural ingredients.

But lately, buyers across Australia have noticed a significant jump in lemon peel prices. What was once considered an accessible, low-cost ingredient has quietly become more expensive—sometimes dramatically so. This isn’t just a passing fluctuation; it’s a sign of something bigger happening within the citrus supply chain.

This small piece of the fruit is reflecting a much larger issue. From droughts to labour shortages and shifting agricultural priorities, the citrus industry is under pressure. And because lemon peel is often sourced as a secondary product after juice or fresh fruit sales, it’s particularly vulnerable to supply chain disruptions. So when there’s less fruit or processing slows down, peel availability takes a hit—and prices rise. What seems like a minor change is actually a signal of systemic strain.

Behind the Peel: A Struggling Citrus Industry

Take Jason Sayer, a citrus grower from Wokalup in Western Australia, who recently made the heartbreaking decision to uproot 1,500 lemon trees from his farm. After years of dedication, the numbers simply stopped adding up. Despite strong demand for lemons and lemon-based products, growers like Jason have been squeezed by a decade of stagnant farmgate prices—prices that haven’t risen in line with skyrocketing production costs for water, fertiliser, labour, and transport.

This isn’t an isolated case. The challenges have become so widespread that Western Australia has seen a sharp drop in citrus producers—from 157 growers in 2013 down to just 90 in 2023. That’s a loss of over 40% in only ten years. The decline speaks volumes about the growing disconnect between market prices and the real cost of farming citrus. Behind every product, like lemon peel, there’s a chain of hardworking growers struggling to stay afloat.

Unpacking the Costs: What’s Draining the Growers?

At the heart of the issue is a steep rise in input costs—making it harder than ever for citrus growers to break even, let alone turn a profit. Fertilisers have more than doubled in price in recent years, while labour shortages have driven wages higher. Machinery repairs and fuel are costlier, and packaging materials—especially sustainable options—now come with a premium price tag.

To put it into perspective, the cost of producing a tonne of lemons a decade ago was significantly lower. Growers could manage expenses and maintain margins. Today, those same lemons cost up to 40% more to produce, but market prices haven’t kept up. That gap is pushing smaller farms into the red.

For many small to medium-sized growers, the economics simply no longer make sense. With slim margins and mounting operational costs, they’re forced to make tough choices—cut back, scale down, or in some cases, walk away entirely.

Supermarket Pressure and the Supply Chain Squeeze

Adding to the financial strain is the overwhelming influence of Australia’s major supermarket chains. These retail giants hold substantial power over pricing and supply contracts, often dictating terms that leave small growers with little room to negotiate. While consumers may see stable prices at the checkout, behind the scenes, it’s a different story—one where growers bear the brunt of cost pressures.

Small and medium-sized citrus farmers frequently lack the bargaining power to push back against lowball offers or rigid contract terms. They’re expected to absorb rising costs without any increase in what they’re paid per kilogram of fruit.

This imbalance hasn’t gone unnoticed. The Australian Competition and Consumer Commission (ACCC) has launched investigations into supermarket conduct, with many farmers coming forward to share their experiences of unfair pricing practices and contract conditions. These testimonies paint a sobering picture of a supply chain where power is concentrated—and growers are left vulnerable.

More Than Just Money: Labour Shortages and Global Events

Beyond financial pressures, Australian citrus growers are also grappling with serious workforce and supply chain challenges. Since the COVID-19 pandemic, the country has faced ongoing labour shortages, especially in seasonal and manual farm work. With fewer backpackers and international workers available, harvests have been delayed or left incomplete—impacting fruit quality and reducing available yields for processing.

Global events have only added to the strain. Disruptions caused by the war in Ukraine, shipping delays, and inflation have driven up the cost and scarcity of key agricultural inputs—particularly fertilisers. With Australia reliant on imports for many of these supplies, local growers are paying significantly more than some of their international counterparts.

These compounding challenges hit Australian growers especially hard. Unlike larger operations overseas with subsidised inputs or cheaper labour, many Aussie farms operate on thinner margins. That makes them far more vulnerable when multiple pressures hit at once—and right now, they are.

Climate Change and Weather Extremes

Climate change is another force reshaping the future of Australia’s citrus industry—often in harsh and unpredictable ways. Growers are dealing with more frequent weather extremes: unexpected frosts, prolonged droughts, and searing heatwaves. Each of these events can reduce yields, damage fruit, and affect overall crop quality—sometimes wiping out an entire season’s work in just a few days.

South Australia, a key citrus-growing region, has been particularly hard hit. Several consecutive seasons of challenging conditions have taken a toll, leaving many farmers struggling to recover before the next bout of extreme weather arrives.

What’s even more difficult is the increasing unpredictability of it all. Traditional growing calendars and weather patterns are no longer reliable, making it harder for growers to plan irrigation, manage harvest timing, or protect crops from sudden frost or heat. This shifting climate reality is yet another layer of uncertainty in an already fragile system.

What This Means for Lemon Peel (and Everything It’s In)

As supply of quality lemons dwindles, basic economics is at play—lower supply equals higher prices. What was once considered a by-product of lemon production is now being treated as a premium item. Lemon peel, once inexpensive and widely available, has become a rare commodity, making it more costly for manufacturers who rely on it for everything from food products to natural wellness items.

The ripple effect of these price hikes is already being felt across multiple industries. Tea blends, particularly those that feature lemon peel as a key ingredient, are seeing price increases. Spice mixes and confectionery products that use lemon peel for flavour are also affected, forcing companies to reassess recipes or pass higher costs onto consumers. Even the aromatherapy industry, which uses lemon peel for its essential oils and fragrances, is feeling the squeeze. As lemon peel becomes a more expensive resource, its impact will be felt far beyond the citrus aisle.

A Path Forward: Can the Citrus Industry Recover?

While the citrus industry faces significant hurdles, there are paths forward that could help turn things around. One promising solution is diversification. Many growers are beginning to explore new crops or expand into agri-tourism and processing, allowing them to buffer the financial risks tied to a single crop. By tapping into markets like value-added citrus products, such as juices, essential oils, or even citrus-based skincare, farmers can create additional revenue streams while reducing reliance on the volatile fresh fruit market.

However, industry change isn’t solely up to growers. Government support and policy changes are crucial to helping the citrus sector recover. Grants, subsidies, and targeted funding for small farms could help alleviate some of the cost pressures. Additionally, policy adjustments that support better contract terms with large supermarkets or invest in infrastructure for rural farming communities could make a meaningful difference.

Innovation within the industry will also be key. Disease-resistant crops, advancements in regenerative agriculture, and the formation of grower co-operatives to share resources and expertise are all promising developments. By embracing new technologies and collaborative approaches, the citrus industry can build a more resilient future—one that supports both growers and the broader market for lemon-based products.

What Consumers Should Know

As consumers, it’s important to understand the real value behind citrus products—especially those as versatile as lemon peel. What might seem like a small, inexpensive ingredient is part of a much larger system that is struggling to maintain balance. With rising production costs, environmental pressures, and supply chain challenges, the price of products made from citrus is increasingly reflective of these underlying issues.

Supporting local growers has never been more crucial. When we buy Australian-grown citrus, we’re not just getting fresh, high-quality products; we’re also helping to sustain local farming communities and ensuring that they can continue to thrive despite the challenges they face. Choosing to buy from local, ethical suppliers can make a tangible difference in the lives of farmers.

Even small changes in our habits can make a big impact. Buying citrus in season helps farmers manage their yields more effectively and reduces the environmental impact of transportation. Similarly, by reducing food waste, we’re helping to ease some of the pressures on growers. Every lemon or lemon peel used thoughtfully counts—because when we support the industry, we’re contributing to a more sustainable future for both the citrus sector and the wider economy.

Conclusion

The rising prices of lemon peel are just the tip of the iceberg. What seems like a minor issue is actually part of a much bigger picture—the struggles faced by Australian citrus growers as they navigate climate change, rising costs, and an increasingly difficult marketplace. From weather extremes to supermarket pressures, the challenges are many, but they also highlight why we all have a stake in the future of Australian farming.

As consumers, we can make a real difference by choosing to support local, sustainable, and fair-trade citrus products. These decisions not only help ensure that Australian farms continue to thrive, but they also help preserve the integrity and quality of the products we enjoy. By buying citrus in season, reducing food waste, and prioritising ethically sourced goods, we can play a part in fostering a more resilient and sustainable agricultural industry.

Together, we can help ensure that the story of Australian citrus—and the growers behind it—remains a bright one. Let’s support our farmers and the future of Australian citrus, one lemon at a time.