Farmers have mixed feelings about the Australian Competition and Consumer Commission’s report into supermarket power.
Some are happy to see increased transparency, while others are concerned the ACCC won’t have enough “teeth”.
What’s next?
Some of the measures include weekly data about what supermarkets have paid for fruit and vegetables to an independent body.
Recommendations made by Australia’s consumer watchdog could even the playing field between farmers and supermarkets but not everyone is convinced.
Last year the Australian Competition and Consumer Commission (ACCC) conducted an inquiry into the nation’s supermarket sector.
The purpose was to examine the pricing practices of the supermarkets and the relationship between wholesale, farmgate and retail prices.
One of the main findings was that many farmers and suppliers were dependent on Coles and Woolworths for their viability.
The inquiry’s final report listed 20 recommendations to address this power imbalance.
They included clearer pricing practices, greater transparency for suppliers and reforms to planning and zoning laws; all designed to address “market failures” and offer suppliers fairer bargaining conditions.
Increased transparency for farmers
The ACCC described the situation facing suppliers as a “monopsony”, where there is effectively only one buyer for their products, who can leverage their buying power to get lower wholesale prices.
Under the recommendations, Woolworths, Coles and Aldi would be required to send the price they paid for fruit and vegetables to an independent body weekly, and they wouldn’t be allowed to change the price or volume of produce after a purchase order had been confirmed.
Queensland Fruit and Vegetable Growers chief executive Rachel Chambers said she was happy to see greater transparency.
Rachel Chambers says the report calls for more transparency. (ABC Sunshine Coast: Owen Jacques)
“My final thought is a feeling of satisfaction actually,” she said.
“He who holds the data holds the power … that inequity had to be looked at.”
Ms Chambers said the ACCC understood how vulnerable farmers could be.
“We did find that fresh fruit and vegetables were the most badly treated, highly subject to the power of the retailers,” she said.
Woolworths CEO Amanda Bardwell.
“Out of that came the 20 recommendations, [and] there’s lots of transparency.”
Woolworths Group chief executive Amanda Bardwell said the company would carefully consider the report’s findings and recommendations.
“We have taken steps to improve the experiences customers and suppliers have with us, and continue to listen carefully to all of them,” she said.
“As reported by the ACCC, supplier costs to supermarkets also increased dramatically in the wake of the COVID-19 pandemic.
“We support improved transparency for suppliers, particularly fresh produce suppliers, and we stand by our previous commitment to the horticultural industry on this issue.”
ACCC needs ‘teeth’
Farmers have complained for years about the dominance of the major supermarkets and the poor prices they have seen.
Australian Dairy Farmers (ADF) president Ben Bennett said the government had to ensure the ACCC was “given teeth” to address what he described as a power imbalance between farmers and the supermarkets.
“Otherwise our very smart and pretty astute supermarkets will just walk around us, as they have done in the past,”
Mr Bennett said.
Ben Bennett wants the ACCC to address the power imbalance between farmers and supermarkets. (Supplied: Peter Somerville)
The ADF has raised “grave concerns” about supermarkets directly sourcing milk from farmers, and rising levels of cheap dairy imports.
“We’ve just been informed that a rather large supermarket … has just imported 6 million kilos of cheese out of New Zealand at a very favourable price, and where does that put the long-term relationship of the Australian dairy farmer with their respective processor?” Mr Bennett said.
A Coles spokesperson said they had not only been competing with traditional supermarkets like Woolworths and IGA but also now with major multinational players like Aldi, Costco, and Amazon.
They said grocery price increases during the past five years were significantly impacted by the rising cost of doing business.
“Coles and its suppliers have faced significant increases in costs like electricity, rent, insurances, wages, transport, and other costs essential for running a supermarket,”
they said.
“Coles welcomes any recommendations that improve transparency for suppliers and customers but cautions against measures that will increase red tape and drive up costs.”
More work to be done
Victorian fruit grower Peter Hall also wanted more steps taken to improve transparency even further.
He believes supermarkets should show how much they pay farmers on supermarket shelves, so shoppers can see it.
Peter Hall has spent the past 40 years negotiating as a grower with buyers. (ABC News: Sean Warren)
“Most fruit and vegetable growers are completely frustrated with what we’re being dealt with,” he said.
“I notice the chain stores have grown their profitability … we are receiving less money for our product then we got five or 10 years ago so I just don’t know how that works.”
The ACCC report has been handed down at the 11th hour before the federal election which is due before May 17.
Assistant Minister for Competition Andrew Leigh said the federal government will provide $2.9 million in the budget over three years to help suppliers stand up to the big supermarkets including for fresh produce industry associations to deliver targeted education programs.
He said the Albanese government welcomed the report and agreed in principle with the recommendations.
“Our ongoing supermarket crackdown means more competition, better prices and better deals for Australians,” he said.
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