Trying to tackle abuses of market power with social media


A version of this article first appeared in the Coffs Coast Advocate on Saturday 26th October, 2013

On Wednesday this week, the Victorian Farmers Federation launched a social media campaign with the hashtag, #TellUsWhy.

The targets of the campaign are Coles, Woolworths and Aldi, and the aim is to mobilise shoppers’ collective power, via Facebook and twitter, to pressure these mega-supermarkets to use Australian-grown produce in their homebrand product lines.

“We’re asking consumers – next time you’re in [one of those supermarkets] – check the fine print on the food you’re about to buy. If it’s an import take an image on your phone, then send it with the #telluswhyColes or #telluswhyAldi hashtag and your comments to the VFF – as a tweet to @VicFarmers or post it on the VFF’s Facebook page”, said VFF social media guru Tom Whitty, in the press release.

There’s a growing public awareness of the impact that cheap imported fruit (fresh and processed) is having on our growers and food manufacturers. Also this week the CEO of SPC Ardmona, Peter Kelly, issued an urgent plea to the new Coalition government for $25 million in funding, saying that without the money the company will be forced to close its Shepparton plant. The consequences of such a decision would be grim: 1000 workers redundant, the contracts of hundreds of local growers terminated, thousands of hectares of fruit trees ripped out ‘and a regional economy would be destroyed’, in the words of local Liberal MP Sharman Stone.

So the VFF is to be commended for its campaign, and apparently the building pressure has already had some impact, with Woolworths ‘committing to using Australian-grown frozen vegetables in its Select brand, and replacing $9 mn of imported tinned fruit with Goulburn Valley growers’ fruit”, according to VFF president Peter Tuohey.

Gary Gardiner
Gary Gardiner

But there are deeper dynamics at work which are placing inexorable downwards pressure on Australian growers and food manufacturers. One is the free trade agenda, which as I wrote last time is being ramped up several notches with the Trans Pacific Partnership deal.

And the other is the familiar story: the excessive market power of the big Australian supermarkets and the impacts of that power on farmers, workers and communities. The VFF campaign might persuade the supermarkets to buy more Australian produce, but what price will the growers and suppliers be getting?

This brings me back to Gary Gardiner, fourth-generation local farmer and now proprietor of Paradise Fruits in Sawtell, whom I first wrote about last month. With his intimate knowledge of the wholesale market system in Australia, Gary explained to me exactly how the supermarkets use their buying power to maximise their gains at the expense of growers:

“Coles and Woolies don’t just control 80% of the grocery market, they control the the market system as well. They’ll walk into a wholesale market and they basically control what’s going on. Let’s look at bananas in the Sydney market. There’s probably four main wholesale agents. With potatoes, there’s maybe two-three. So Coles and Woolies come in, they look at a product and say, right-o, that’s selling for $15 a carton. So they say to the agent, we’ll take all your production for $12, everything in your coolroom.”

“So that’s fine, they get a $3 discount. The agent’s going to say yes, because he’s on a fixed percentage. There’s no impact on him, it’s an easy sale. It’s the poor old grower who cops the hit”, Gary said.

“We’ve had so many stories. Let’s say there was a shortage of butternut pumpkin on the market. Let’s say it’s $1 a kilo. The [duopoly] will go in there and offer 70 cents a kilo, and take everything on the market. There’s usually one or two smaller growers there, holding out, and the price will automatically go to $1.50 a kilo, because there’s nothing on the market for anyone else to buy. Mysteriously, a percentage of the Coles and Woolies product will reappear for $1.50. Without even leaving the market, so they make a 100% mark-up on that product.”

Tell us Why? Indeed. To be continued.