Farming Group Says One-Third of Growers Ready to Leave the Sector

Woolworths and Coles Supermarket signage in Melbourne, Australia, on Feb. 21, 2024. AAP Image/Joel Carrett

Over a third of vegetable producers are contemplating leaving the sector, putting Australia at risk of becoming a net importer of fresh food, a federal inquiry was told.

AUSVEG, Australia’s leading horticultural body, attributed this trend to a range of reasons, but blamed the “manipulative and unconscionable” tactics of supermarket retailers as one of the key drivers for vegetable producers to walk away.

According to a recent survey, 37 percent of vegetable growers expressed an intention to exit the industry next year.

“In many instances, the prices being paid by supermarket retailers for Australian-grown vegetables are making it increasingly unviable for some farming businesses to continue operating,” AUSVEG said in a submission to the inquiry on supermarket prices.

According to the Australian Bureau of Statistics, the horticulture industry produces 93 percent of the total volume of food consumed in Australia, and 78 percent of retail fresh vegetables are sold through Coles, Woolworths, and Aldi.

“What should be a mutually beneficial arrangement, is in practice the opposite, with the imbalance of power heavily weighing in the retailers’ favour,” the organisation said.

“In fact, the relationship is so flawed that growers fear commercial retribution should they raise any issues with the retailer, or any of the other complaints mechanisms available, including the Food and Grocery Code arbiters, the Food and Grocery Code Independent Reviewer or the Australian Competition and Consumer Commission (ACCC).”

Farmers Call on Supermarkets to Stop Treating Produce Like ‘Clickbait’

The horticultural body also claimed retailers devalued fresh produce by using it as“clickbait” to lure customers into their stores.

Lucy Gregg, AUSVEG General Manager Public Affairs, used the example of broccoli costing farmers $4.50 yet sold at $2.90.

“Treat fresh produce with the care that the growers put into it, and stop using it as clickbait to get people in the store,” she told the Senate Committee on March 13.

To address these issues, AUSVEG proposed tightening regulations around promotions by introducing a “code of behaviour” to ensure retailers act prudently, and in the best interest of the fresh produce sector.

While most of the focus has been on supermarket prices, some commentators argue that the problem is more nuanced than that.

Graham Young of the Australian Institute of Progress said supermarket profits were, in fact, “wafer thin.”

“If you look at the financials of the two major supermarkets you find that their after-tax profit amounts to somewhere between 2.53 percent (Woollies) and 2.57 percent (Coles),” he wrote in The Epoch Times.

“What that means is their scope to lower average prices without going out of business, once you take account of their company tax, is no more than around 3.5 percent, or around a third less than the increase in the CPI, and that would be a once-off effect only.”

Long-Term Outlook for Australia’s Food Bowl Not Good

Meanwhile, the farmers also acknowledged the current economic environment and challenges were contributing to the poor situation of some farmers, and the country was heavily exposed to overseas suppliers.

Australia is already a net importer of energy, fuels, fertilisers, chemicals, biosecurity incursions, workforce challenges, floods, bushfires, wars, and international geopolitical events—all adding costs to everyday goods.

Relying on imports means Australia is also subject to differing food quality standards, CEO of AUSVEG Michael Coote said.

“It is also demographic issues—the average age of a farmer in our industries is close to mid-60s, on average. You’ve got a lot more that are older that will potentially retire with limited succession coming through,” he added.

“If we lose the capability of farmers who know dirt under the fingernails, farmers who don’t know how to produce the volumes of food to feed this country, there are very limited options for new entrants coming into this market.”