South Australian produce farmers call for better deal from supermarkets amid 21% drop in farm gate prices

South Australian growers have publicly challenged major supermarkets to give both farmers and consumers a better deal at the check-out or risk severe shortfalls in produce.

Farming bosses have warned of mass exits from the industry and challenged supermarkets to pay more for produce, with growers getting 21% less in their pockets for fruits and vegetables compared to the last financial year.

The Horticultural Coalition SA, which represents more than 3,500 businesses, has found South Australian growers are being paid just 98 cents per kilo on average for produce, down from $1.25/kg in the previous year.

It comes after the federal government directed the competition watchdog to investigate alleged price gouging by supermarkets, with major players Coles and Woolworths posting $1.1 billion and $1.6 billion profits last year amid a cost of living crisis.

Angelo Demasi from the Horticultural Association SA holding produce at a farm, Wednesday, Jan. 31, 2024. Picture: Matt Loxton

Horticultural Coalition SA president Angelo Demasi welcomed the ACCC inquiry but said supermarkets must be willing to pay growers a bigger cut from profit margins or risk “jeopardising livelihoods”.

Though farm gate prices climbed to a five-year high in 2022 on the back of poor weather pushing down supply, farmers are now getting only two cents more on the kilo than in 2019 while coping with growing costs due to inflation.

“There’s not much you can really produce below a dollar,” Mr Demasi said.

“There’s transport and packing costs for the supermarkets of course, but there’s certainly a major issue with the disparity between what prices farmers are getting and what people are paying.

“Farmers have just had an increase in wages, the cost of fertiliser, electricity, all of that, but at the end of the day, we still have to grow the product and make a profit, or else we’ll have people exiting the industry because they just can’t afford it.”

Mr Demasi wants the government to strengthen the ACCC’s mandatory horticulture code which he called “toothless at the moment”.

Currently, the code regulates trading and prices between growers and resellers, but not growers selling directly to supermarkets, which makes up around 50 to 60 per cent of the South Australian market.

Angelo Demasi from the Horticultural Association SA holding produce at a farm, Wednesday, Jan. 31, 2024. Picture: Matt Loxton

He was also concerned that if more farmers left the industry, the Australian market could be flooded with imported frozen produce in a scramble to meet demand.

“Any nutritionist will tell you that fresh is best, but we’ve seen supermarkets buying more frozen produce because they can essentially buy all over the world and not worry about prices,” he said.

“We don’t want to be like the UK where a lot of the product is imported out of necessity. You try to chomp into an apple there, and it’s dry and just not good.

“If we want to continue to enjoy local products, we need to ensure that growers are getting a fair price.”

While Coles and Aldi did not respond to a request for comment, a spokeswoman for Woolworths said supply and demand was the “number one determinant of market prices”.

“Many Australians will remember the high fruit and vegetable prices faced in recent years due to heavy rain throughout La Nina – they were driven by higher prices being paid to farmers as a result of reduced supply,” the spokeswoman said.

“Over the last 12 months, weather in many growing regions has been much better, resulting in higher supply and a return to lower prices.

“Across our fruit and veg range, the average price in our stores is lower than it was this time last year – and the year before – as we work to ensure customers benefit from lower farmgate prices.”

Angelo Demasi from the Horticultural Association SA holding produce at a farm, Wednesday, Jan. 31, 2024. Picture: Matt Loxton

On Thursday 25 January, Prime Minister Anthony Albanese announced the 12-month long inquiry into supermarket pricing which will examine “the difference between the price paid at the farm gate and the prices people pay at the check-out”.

“For me, it’s this simple – when farmers are selling their product for less, supermarkets should charge Australians less,” Mr Albanese told the National Press Club.

The South Australian Greens have also pushed for a separate inquiry at the state level which will be debated when parliament resumes next week.

Originally published as South Australian produce farmers call for better deal from supermarkets amid 21% drop in farm gate prices