Farmers at crisis level as they cop unfair prices, Senate supermarkets inquiry told

Farmers aren’t paid enough for their produce while supermarkets use cheap vegetables as ‘clickbait’ to get shoppers through their doors, a Senate inquiry has heard.

AusVeg chief executive Michael Coote said vegetable growers are facing a crisis.

Farmers are receiving prices for their produce from the super­markets that haven’t changed in more than 10 years, the Greens-led Senate inquiry was told on ­Wednesday.

The supermarkets inquiry, chaired by Greens Senator Nick McKim, is touring the country, with public hearings in Melbourne on Wednesday hearing from farmers and consumer advocacy groups.

The inquiry was told the prices paid by supermarkets are placing cost pressures on vegetable growers and threatening their ability to grow food to then feed the nation.

Ausveg chief executive ­Michael Coote described the business pressures his member growers were under, driven by the behaviour of supermarket ­giants Woolworths and Coles, as a “crisis”, which was contributing to a margin squeeze that was leading farmers “to breaking point”.

Ausveg chief executive Michael Coote.

Ausveg general manager of public affairs Lucy Gregg

While the inquiry will soon hear from the bosses of Woolworths and Coles, on Wednesday it was the turn for suppliers to have their say.

The picture painted by fruit growers, dairy farmers, croppers and meat producers, as well as consumer rights groups, is that farmers are receiving low prices for their goods from the supermarket majors as input prices continue to rise, which is threatening the viability of the nation’s family-owned farms.

Mr Coote told the Senate inquiry in his opening remarks that in order for his members to continue to grow and supply vegetables and “feed the nation”, the farmers must be paid fair and sustainable prices for that produce.

“Instead, many growers are under increasing pressure from supermarkets to accept lower and lower prices, with many receiving the same prices they were five, or 10 or even more years ago,” he said.

Mr Coote said a survey last year conducted by Ausveg, the leading industry body for vegetable growers, showed that 34 per cent of growers were thinking of leaving the industry due to the cost pressures and trading environment. A repeat of that survey recently found that had lifted to 37 per cent considering exiting the vegetable-growing industry.

Lucy Gregg, general manager of public affairs for Ausveg, said the leading supermarkets were sometimes selling vegetables at below “fair prices” to act as “click bait” to bring shoppers through their doors.

Ms Gregg told the Senate inquiry the supermarket giants knew very well the shopping patterns of their customers as it relates to prices, and how prices could stimulate demand, but nonetheless sold vegetables at ­prices well below what they were worth.

“So for instance last year there was fantastic weather, there was probably an oversupply of vegetables, and some of the prices for vegetables were really cheap,” Ms Gregg said. “Now the retailers have all the information about price inelasticity, they know that a consumer thinks broccoli is a good price at $4.50, and that’s a fair price, so why do we sell it at $2.90?

Greens Senator Nick McKim is chairing the inquiry. Picture: Brendan Beckett

“And that’s some of the things that we would like to see this code of behaviour is to treat fresh produce with the care that the growers put into it and stop using it as your clickbait to get people into the store.”

Earlier the National Farmers’ Federation said a recent poll of its members revealed that 80 per cent of those surveyed had concerns about the market power of the two leading supermarket chains, Woolworths and Coles, with these concerns especially heightened among growers of perishable goods.

National Farmers’ Federation general manager for trade and economics Chris Young said in his appearance that the supermarkets power within Australia was a concern for his members.

Mr Young said the food supply chain was “not working in an equitable way”, with the risk for producers “out of whack” as they didn’t have full access to market data such as prices and volumes.

Charlotte Wundersitz, general manager for rural affairs for the National Farmers’ Federation, told senators farmers squeezed by the market and facing cost pressures could not invest in innovation, such as renewable energy, or in infrastructure for improving their farming businesses.

Ritchies Stores chief executive Fred Harrison said the major ­supermarkets were land banking large parcels of land across the country and keeping out independent supermarkets, such as his banner or the other leading independent supermarket chain, IGA, with landlords also often offering the best sites for supermarkets to Woolworths and Coles before smaller independents.