The warning on vegetables, from the Australian Vegetable and Potato Growers Federation (Ausveg), came after Prime Minister John Howard told Australians to brace themselves for higher food prices as the drought reduced food production. "There will be a food shortage and that will have an effect on prices," Mr Howard said yesterday.

The Federal Government announced a $714 million aid package for drought-affected farmers this week, including doubling exit grants to $150,000 for farmers to leave the land.

Ausveg chairman Michael Badcock said a food shortage was unavoidable this summer.

"We'll have quite a lot of fluctuation in prices and there's a lot of product that's not been planted this year because we don't have any water storage or river systems that have water in them. At times prices will come back to normal, but other times they could be three or four times higher," Mr Badcock said.

"We are going to experience food shortages until at least Christmas even if we get rain now, because it could be between three to five months at this time of the year from planting 'til you get a harvest."

The price of lamb — in oversupply at the moment as more and more farmers are forced to sell or slaughter their animals — is also expected to rise next year.

"Once we move into 2008, that's when we are likely to have supply shortages and hence possibly some upward pressure on retail lamb prices," Sheepmeat Council of Australia executive director Bernie O'Sullivan said.