Grocery code review: Supermarket suppliers ‘still fear retribution’

Producers are struggling to break even, but aren’t using supermarkets’ dispute resolution process, and the ACCC has noticed.

Supermarkets will again be put under the microscope for their approach to supplier disputes, as it emerges just two suppliers have lodged complaints in the past year.

Over the same time period producers have asked the major retailers for thousands of price adjustments, as they grapple with soaring input costs and struggle to break even.

The federal government has signalled it will review the Grocery Code of Conduct’s dispute resolution process, looking at whether it provides an effective, fair and equitable mechanism for raising and investigating complaints between retailers and suppliers.

Jeff Kennett addresses the crowd at a Hawthorn event. Picture: Ian Currie

In 2020 the Code required its signatories Woolworths, Coles, Aldi and Metcash to appoint an independent arbiter to handle supplier complaints. But in the 12 months to June 30, a total of two complaints were received by Coles arbiter Jeff Kennett.

Not a single complaint was fielded by any other major retailer despite receiving thousands of price increase requests, many of which were not responded to for months.

Independent Food Distributors Australia chief executive Richard Forbes said it was difficult to understand how anyone could suggest the Code was working with so few complaints made by suppliers.

“It is clear that suppliers still fear retribution if they speak out,” he said. “The facts are that when you are a price taker and you’re negotiating with large, powerful retail supermarkets, you are immediately in a position where your ability to influence an outcome is eroded. “Progress may have been made since the Code’s inception in 2015 but it is also clear a different approach is required to encourage suppliers to provide evidence of wrongdoing.”

Mr Kennett said he spoke to 600 Coles suppliers last week and urged them to come forward with any issues they may have.

Hawthorn President Jeff Kennett speaking at The Peter Crimmins medal ceremony at Crown.

“People are saying suppliers are fearful of making complaints but I think the reality is, over the last few years people have just been trying to survive given Covid and changes in the marketplace,” Mr Kennett said.

“A lot of people (suppliers) live in fear because they have one product with two main sellers, so there are understandably concerns about what would happen. But they should not fear retribution.”

Victorian apple and pear grower Peter Hall suggested one reason suppliers might be reluctant to approach an arbiter was they felt defeated by the system that favoured a handful of very powerful retailers.

“These issues, being fair pricing in fruit and veg – are well known and are not being addressed so there’s probably a fair amount of scepticism about the process being effective.”

By June, the supermarkets were reporting five times as many price rise requests from suppliers than a ago. And Coles chief executive Steven Cain said the amount being asked for was substantial, reflecting the pressure suppliers were under to break even amid record inflationary pressures.