Retailers need to demonstrate greater price transparency
Industry AdvocacyFrustration at the behaviour of the major retailers has again angered many growers.
Growers continually raise the issue that they have very little understanding how the major retailers determine the ‘weekly’ price that is paid for their apples and pears. Typically, at the start of each week, most growers submit a price that they would be willing to sell at. They are then advised by the retailer of the ‘market’ price and asked if they would be willing to accept it.
Many scratch their head as to how this number is determined. Is it the lowest price offered? Is it a weighted average? Is there a sophisticated supply-and-demand model that matches the elasticities of other fresh fruit? Who knows.
Growers advise that they typically accept this ‘market’ price for numerous reasons – they have a perishable product and need to move volume, they need to pay current bills, or they don’t want to upset the retailer and face potential commercial retributions.
This lack of transparency and data asymmetry (where the retailers have all the information and the growers fly blind) needs to be fixed. It is difficult enough that the major three retailers already have a 77 per cent market share (see the Advocacy Update in the Summer 2022 edition of AFG), without growers having any access to any meaningful market data.
APAL continues to make growers’ access to data a priority as it will provide a much fairer market. We continue our discussions with the broader agriculture industry, through the National Farmers’ Federation Horticulture Council. This sector all faces the same challenges. In addition, we continue to talk to the Australian Competition & Consumer Commission (ACCC), the federal government and elected members of Parliament, as well as the arbiters from the Food and Grocery Code of Conduct.
Hail damage reinforces need for National Netting Program
The recent (and multiple) hailstorms throughout the Goulburn Valley and Adelaide Hills, again highlights the need for the government to continue to fund the National Netting Program. Netting provides protection from not just hail, but also from birds, pests and excessive heat, as well as reducing overall water usage – all factors that add to Australia’s food security.
The federal government has now allocated over $60 million to this program, with the latest round being offered to the broader horticulture sector (not just apples and pears). This is a very generous program and growers are encouraged to apply if financially able to do so.
Given that permanent netting can cost more than $70,000 per hectare, APAL is aware that not all growers have access to the initial capital to access the program, and we will continue to explore how to make this more accessible.
This article was first published in the Autumn 2023 edition of AFG.
