Fruit and vegetable growers fear they may be victims in supermarket wars
Posted by Labels: Australia, Fruit, Fruit Farming, Vegetable
AUSTRALIAN fruit and vegetable growers fear they will become the latest victims in the supermarket price wars after Coles slashed its fresh produce prices.
A bumper growing season combined with the high Australian dollar means there is an abundance of fruit and vegetables available.
This prompted Coles to announce it would help farmers move excess stock by slashing prices in its stores.
Coles said the prices of at least a dozen popular fruit and vegetable lines, including tomatoes, peaches, carrots and rockmelon, would be cut each week.
The grocery giant said by making fruit and vegetables more affordable they would provide a more certain market for Australian growers.
But vegetable industry body Ausveg said if the supermarkets became locked into a price war the opposite would be true.
The group's national marketing manager Simon Coburn said aggressive discounting would hurt Australian growers.
"It's not going to be long before Woolworths jump in," he said.
"There's no way they're going to be giving this much ground on Coles.
"The issue is whether these retailers are going to be absorbing the costs themselves, which is pretty unlikely, in which case these discounts will be passed on to the growers to absorb and that's not sustainable at all."
Mr Coburn said in the short term the growers supplying Coles would benefit from higher sales.
But if the aggressive pricing tactics prompt Woolworths to follow suit, the effect on the industry as a whole would be negative.
National Farmers Federation CEO Matt Linnegar said the price cuts were about attracting customers and the benefits to growers relied on Coles increasing sales.
"How much of what we're seeing is only short term? Can prices continue to be slashed?" he said.
Riverina Citrus chairman Frank Battistel, spokesman for more than 500 citrus fruit properties in the Riverina Citrus industry, fears that growers' margins will be squeezed further by a drop in prices.
He says after a productive growing season, many citrus farmers are already selling their produce at a loss.
He also questioned where Coles would be recouping the cost of cutting fruit and vegetable prices.
"When I get 20 cents a kilo and ask why do you charge $2 per kilo they say we'll need to sell at that price, this is what it costs to do business," Mr Battistel said.
"Now they're saying that they can knock off 50 per cent."
Coles and Woolworths have previously tried to undercut each other on a range of other staples including bread and milk.
Acting Greens leader Christine Milne said that while the latest cuts would be welcomed by consumers, they would put pressure on many farmers.
"I am sure that there will be some growers that go out of business," Senator Milne told reporters in Hobart.
"Already in Tasmania there are farmers producing for the fresh vegetable market who are selling below the cost of production."
Coles said the price cuts were good news for growers who had produced a bumper crop thanks to ideal growing conditions in recent months.
"By offering customers low prices on fruit and vegetables, Coles expects to increase sales, providing a more certain market for Australian growers who with such an abundance of product may otherwise end up having to leave some crops in the fields," Coles said in a statement.
But Senator Milne called on Coles to prove that the lower prices would not have a long-term effect on the price it paid farmers for fruit and vegetables.
She said she feared the prices Coles was paying growers to take the glut of fruit and vegetables off their hands would remain in place permanently, leaving farmers worse off financially.
"The farmers don't have that capacity to offset the losses," Senator Milne said.
"If they lose at the farm gate that ultimately means they leave the land if they can no longer sustain a business."
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