Senate inquiry: Fresh produce prices ‘have legitimate challenges’, Banducci says

Woolworths chief executive Brad Banducci has told the senate inquiry the accuracy of the retailer’s buying forecasts is “pretty good”, despite accusations of over-ordering to bring down prices.

The setting of wholesale fruit and vegetable prices has “legitimate challenges”, Woolworths chief executive Brad Banducci says.

“There are very clearly challenges in the fruit and vegetable sector at the moment. It’s one of the issues that has struck me. So there is an opportunity for more price transparency and that would be a starting point (for producers) to make more informed decisions,” he said.

Mr Banducci was asked at a Senate inquiry into supermarket prices on Monday about the level of transparency around price setting for perishable goods in particular.

“Fruit and vegetables is the one where the market price has questions and challenges which are legitimate. With meat you can look at the Eastern States Young Cattle Indicator … “Fruit and veg (sic) is a key issue for us to lean into.”

Mr Banducci said the retailer bought about 16 per cent of fresh produce grown in Australia from 350 growers. He denied Woolworths tried to push suppliers down to a price and that the system worked over a two-week period where volumes were confirmed and then prices agreed to.

Liberal Senator Susan Kovacic asked Mr Banducci about the volume of produce bought from fruit and vegetable suppliers and how this compared to the indicative forecasts asked of them to supply.

“When we do our demand forecasts and give them to suppliers, I have gone back to look in preparation (for the Senate inquiry) and it’s pretty good where the season is predictable,” he said.

“Where it is predictable we reconcile pretty well … When you look to these pip fruits, you can be accurate over the season but terribly inaccurate by the week.”

The question from Senator Susan Kovacic comes after a federal government inquiry into the food and grocery code of conduct revealed supermarkets were deliberately over-ordering fruit and vegetables to “strategically” create an oversupply and pay growers less.

The Australian Competition and Consumer Commission has also raised the issue following concerns from suppliers that indicative volumes were provided but often not adhered to.

Mr Banducci said most of the price inflation the supermarket was experiencing was in long-life categories, particularly in non-food based products such as dishwasher tablets.

“In fruit and vegetables in particular, we’ve had deflation in the last 12 months, so it’s quite a different story,” he said.

Mr Banducci said this was a challenge for suppliers who were dealing with inflationary pressures that weren’t being reflected at the check-out.