Growers should be allowed to bargain more fairly with the supermarkets

Addressing the power imbalance between growers and supermarkets is key to creating a more level playing field. 

As I have often mentioned, the disparity in the bargaining position between the major supermarkets and fresh fruit growers is massive. Coles and Woolworths have a 66 per cent market share, with annual turnovers of up to $50 billion annually. The supermarkets set the buying cycle, don’t offer contracts, control all the data, set the standards, charge random and non-transparent rebates, change purchase orders, and so on. 

Over the last five years, we have seen this dominant market position impact the sector. Costs have increased by around 60 per cent over the last eight years or so, with a 22 per cent increase in costs to produce Class 1 apples in the last 12 months alone. Given the supermarkets’ bargaining power, they have often ignored the legitimate price increases of the growers. The situation is becoming critical. 

As expected, the findings of the ACCC’s Supermarkets Inquiry Final Report, publicly released on 21 March, highlighted this massive power imbalance between growers and supermarkets. 

The report, which detailed the ACCC’s recommendations to government, identified that the supermarkets: 

• are the most profitable in the world 
• increased their margins over the last five years  
• received significant funding from growers for promotions and rebates. 

Critically, the ACCC concluded that Coles and Woolworths have monopsony power in acquiring fresh produce. For years, growers have known this power, but have been unable to speak out due to concerns over commercial retribution. Some growers have not received price increases for 15 years, yet the supermarkets continue to deny any misconduct, saying the market is determined by supply and demand. 

One practical method of addressing this imbalance would be to allow growers to come together to discuss pricing and supply management. This would in some way help address this significant power imbalance. However, it is it is illegal for growers to discuss such things for fear of creating a ‘cartel’. This is one of the biggest ironies of any economic policy in the country. 

The idea that small growers (relative to Woolworths and Coles) could ever be able to exploit the monolith supermarkets is ridiculous. The idea that the law preserves and further protects this supermarket monopoly (‘oligopsony’ for the purists) is just wrong. 

We have asked the government to provide ‘automatic authorisation’ to growers to come together to share data, stock on hand and pricing strategies so that at least the playing field can become a bit more level. While there is a process for this to occur now, it requires the growers to nominate themselves and this list is then provided to the supermarkets to review. Growers will never do this for fear of commercial retribution. It is no surprise that almost no company has ever taken this path with the major supermarkets. 

The supermarkets will always hold the upper hand. They still have the option of not buying or buying less – and for a perishable product, that is a huge bargaining tool. 

The growers cannot distort the market; it may, however, lead to better planning and planting decisions, more transparent data and more fair pricing. 

APAL will continue its work through the NFF Hort Council, lobbying the government to ensure the ACCC’s recommendations in the final report aren’t just noted, they are enforced. 

Healthy eating should be a priority of the federal government

The Murdoch Children’s Research Institute released a report in March which revealed that 36 per cent of Australians aged five to 24 were classified as either overweight or living with obesity in 2021. That is a staggering 2.3 million children and adolescents. This places Australia as having the fifth-highest level of obesity in that age group out of high-income economies. Worse, the research predicts that by 2050 Australia would be second on this list. 

The federal government should be focused on this issue, if for no other reason than to minimise the cost to the nation for managing obesity and diabetes. 

Healthy eating, or lack thereof, is at the core of this issue. A walk down the aisle of any supermarket in Australia highlights the challenges. The proliferation and promotion of processed food over fresh produce should set alarm bells ringing. 

As a peak industry body (PIB), APAL is working with other fresh fruit and vegetable PIBs to unashamedly push for the government to prioritise the consumption of fresh fruit and vegetables for the health of the nation, as well as supporting domestically grown produce. 

This article was first published in the Autumn 2025 edition of AFG.