Farmers, groups split over supermarkets price gouging claims, Senate submissions show

Woolworths and Coles have been accused of predatory pricing and price gouging by some farming groups, but defended by others, submissions to a Senate inquiry show.

Primary producer industry bodies have accused supermarket giants Woolworths and Coles of price gouging, market manipulation and taking advantage of poor farmgate prices to boost profits, but not all agree.

The Senate inquiry into supermarket prices has published the first batch of submissions from industry players, with a split already emerging among stakeholders.

Fruit Growers Victoria, an organisation representing apple, pear and stone fruit growers and packing sheds in Victoria, lashed out at the supermarket chains, accusing them of predatory pricing.

It said “abuse of market power” and “unfair buying terms” were making fruit growing uneconomic, with its members forced to sell fruit below the cost of­ ­production.

“The two major retailers, Coles and Woolworths, are able to set the price for horticultural produce, due to their dominant 65 per cent market share. Growers must accept prices offered because their produce is perishable, they require cash flow to meet production costs, or because they are afraid of retribution,” Fruit Growers Victoria chairman Mitchell McNab said.

“The price is set by the lowest price available, which is regularly below cost of production. We are in an unsustainable situation, for both growers who need to make a living, and the public who rely on fruit producers maintaining production over the long term.”

Still, the $6bn pork industry said it saw no evidence of alleged price gouging by the leading supermarket chains, while individual farmers such as cattle and lamb producers praised their supplier relationship with the chains.

The submissions are part of the Senate inquiry into pricing that was called for by the Greens and backed by the Albanese government. It is one of several public inquiries into the $120bn supermarket sector, which include an investigation by the ACTU, led by former competition tsar Allan Fels, which is expected to report its findings on Wednesday. Fruit Growers Victoria is calling on the government to ask the ACCC to investigate supply chains and margins.

It wants mandatory price reporting by the two major supermarkets to the ACCC, outlining supply chain costs and margins, and to increase the powers of the ACCC, with the resources needed to capture and analyse data.

It also seeks stronger regulatory arrangements covering unfair contract terms, and options for collective bargaining to redress power imbalances.

A submission from the Australian Beef Association claimed there was a large gap between farmgate prices for beef and the prices Woolworths and Coles charged customers, with the difference largely driven by market power. The ABA submission accused the supermarkets of price gouging.

“Since the supermarkets have dominated the meat market, any increase in cattle prices led to immediate price rises on the supermarket shelves. However, when the price of cattle falls there is every excuse possible why the retail price of meat hasn’t come down. Subsequently, many families cannot afford the high beef ­prices.

“The supermarkets buy an enormous amount of box meat. They buy wholesale priced porterhouse around $17 a kg and retailing porterhouse on average of $45 per kg for ‘premium grass fed’. This is a 246 per cent mark­-up. Even with the recent reduction in costs to consumers of around 4 per cent, this is an unacceptable gouging of family and consumer pockets in the community.”

‘When the price of cattle falls there is every excuse possible why the retail price of meat hasn’t come down.’

TasFarmers, the peak body representing Tasmanian primary producers, said the widening gap between farmgate prices and supermarket prices was a “pressing concern”.

“Tasmanian primary producers … are grappling with a stark disparity that threatens the economic viability of the agricultural sector. While farmers face the challenges of fluctuating commodity prices, the retail sector experiences a different reality, where consumers bear the brunt of rising costs for essential items.

“This discrepancy highlights an urgent need for a fair and transparent pricing structure that ensures equitable returns for farmers while addressing the affordability concerns consumers face.”

TasFarmers said the concentration of the grocery market in Australia, dominated by a limited number of major supermarket chains, has significantly influenced the pricing of food and groceries.

Lamb grower Charles de Fegely says he’s had a positive trading relationship. Picture Yuri Kouzmin

This concentration has granted these entities substantial corporate power, enabling them to dictate terms to suppliers and impact the overall market dynamics. Consequently, consumers often bear the brunt of higher prices for essential items,” it said.

Some submissions supported the supermarkets.

Australian Pork, the peak body for the $6bn pork industry, said it had seen no evidence of price gouging by the supermarket chains. “While we are aware of recent press attention directed towards the supermarkets, in particular in relation to ‘price gouging’, we have not identified specific price rises or areas of concern within pork categories,” its submission said.

“Whilst large retailers certainly do have power in the market, we have found no evidence of misuse and producers involved in this market mechanism report no problems outside of normal commercial negotiations.”

Victorian lamb grower Charles de Fegely, a supplier to Woolworths, reported a positive trading relationship with the supermarket giant, including strong prices for his produce.

“Woolworths is our main customer and we have over the past two years developed a favourable relationship.

“The prices we have received in the past two years would be the best that we could achieve in the industry if not better.

“The prices paid by both Coles and Woolworths are ahead of some of the other processors who have endeavoured to keep the prices down,” Mr de Fegely’s submission said.

“It would be an absolute disaster if the outcome of this inquiry was to have government intervention in price setting.

“The current model is not perfect but we need to have the free market remain which is influenced by supply and demand.

“The greatest problem for our enterprise is not the prices received but the massive increase in costs in the past twelve months.”

Cattle supplier Colin Say & Co argued that Woolworths had consistently offered competitive rates that reflected current markets.