Dark side of supermarkets exposed

The recent ACCC public hearings which formed part of the inquiry into supermarket practices were both fascinating and revealing. 

In November the ACCC conducted the public hearings, with the CEOs and senior executives of Coles and Woolworths being subpoenaed to testify. I listened to their testimonies under oath and their responses to questions from the prosecuting Senior Counsel.  

While they had well-structured answers for most parts of their businesses, their Achilles heel was clearly their treatment of fresh fruit and vegetable growers. I got the sense that even the Senior Counsel for the ACCC was dumbfounded by the treatment of growers by the supermarkets. 

That there are no forward-looking contracts with pricing or volume. That even purchase orders could be altered only days before delivery. The litany of fees and charges deducted from the growers’ agreed price (rebates, offset costs, volume rebates, supply chain collaboration, off-invoice discounts, promotional support, variable investment, etc) seemed almost comical if not for the real-life implications.   

The supermarkets’ senior executives’ confusion over the fact that ‘commitments’ to growers are not legally binding highlighted a lack of understanding of what happens in their businesses. Every aspect of every part of every practice seemed tilted towards the supermarkets and this was not lost on the ACCC.  

On a side note, it is interesting that if you analyse the share price of one of the big two supermarkets over the last 25 years, you get an average return of 13 per cent annum. Superannuation, by contrast, returned 7.3 per cent per annum over the same period. Growers can only dream of such numbers, notwithstanding they are the ones who bear most of the risk and produce the lion’s share of what is sold. Based on these numbers, it would appear almost all productivity improvements from the growers have been transferred to the supermarkets over this period.  

It could be argued we have been observing a generational transfer of wealth from those who bear the risk (farmers) to those who don’t (the supermarkets). 

Federal election – policy asks 

The upcoming federal election provides a very good opportunity for our industry to present a concise request for our sector. 

In short, we are highlighting that growers are being crippled by excessive bureaucracy, unfair supermarket practices, poor biosecurity and a lack of productive workers. Given that farmers underpin our food security and our nation’s health (think fresh fruit and vegetables), we will be promoting these policies, along with the rest of the horticulture sector. Our key asks are as follows:  

Labour policies that work for farmers and workers

Agriculture faces unique challenges with seasonal, short-term work that often requires relocation. Labour policies must protect workers while supporting farmers’ needs. We need to do the following:  

• Maintain backpacker workforce. Backpackers provide up to 50 per cent of the harvest labour, a critical element of our national food security.  

• Simplify the Pacific Australia Labour Mobility (PALM) scheme. The program is vital but buried in bureaucracy. It needs to be streamlined.  

• Enforce existing worker protections. Current worker protection laws are sufficient – they just need to be enforced. Creating new laws will only hurt honest growers, while the unethical will continue unchecked.  

• Introduce a harvest visa. Seasonal harvests require a specific, short-term workforce. A dedicated harvest visa will allow overseas workers to fill these roles, earning Australian wages in safe conditions.  

Fair competition for farmers and consumers

Australia’s supermarkets hold too much power, using predatory pricing to exploit farmers and inflate consumer costs. Supermarkets need to be held to account with the following measures:  

• Personal accountability for executives.  

• Enforceable fines and penalties. The current penalties are ineffective because regulators often lose in court.   

• Boost ACCC’s investigative powers to investigate and prosecute anti-competitive behaviour.  

• Easier collective bargaining for growers. Farmers need to more easily bargain collectively, giving them more power to negotiate fair prices with supermarkets.  

• Increased access to overseas markets to reduce reliance on the supermarkets.  

Protect Australia’s biosecurity

Our farmers bear the cost of imported pests and diseases, despite having no control over border security. We need to shift this burden to importers – who are the primary risk for biosecurity incursions – and protect Australia’s farms.  

• Introduce a biosecurity container levy. Importers need to pay a levy to cover the costs of biosecurity programs as this will ensure that those who pose the risk bear the cost.  

Simpler laws for farmers

Farmers are drowning in compliance and red tape. New regulations are introduced without consideration of the farmer’s ability to manage or implement them. We need a simpler, more effective regulatory system.  

• Full review of current compliance requirements.  

• Ensure fast and effective access to ag chemicals.  

Promote fresh fruit and vegetable consumption

As a nation, it is critical to promote the consumption of healthy food via a national healthy eating program.  

• Implement a national policy to increase fresh fruit and vegetable consumption to reduce government costs and improve national wellbeing.  

• Extend the national netting program as this will improve the quality and reliability of Australia’s fresh fruit and vegetables.  

By supporting these five key pillars, we will protect Australian growers, ensure fair prices for consumers and safeguard our nation’s food security. 

This article was first published in the Summer 2024 edition of AFG.