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Growers on alert as fruit and veg price war begins

Posted on February 3, 2012

By BEN PISCIONERI

COLES supermarkets’ announcement that it will slash some fruit and vegetable prices by up to 50 percent has farming groups on high alert.

Victorian Farmers Federation Andrew Broad.

Victorian Farmers Federation president, Andrew Broad, called on Coles to commit to an “ethical sourcing policy” when dealing with Australian fresh food producers while Independent South Australian Senator, Nick Xenophon, has called for an inquiry into fruit and vegetable prices.

A Coles representative told the media during the week the higher price cuts would only apply to “over produced” fruit.

Mr Broad conceded heavy discounting on some over-produced lines could have a positive impact, stimulating markets, which could help move any backlog.

But he warned it must not come at the expense of growers’ bottom lines.

“Growers will have no problem with the latest cut-price strategy as long as they are being rewarded for their investment,” Mr Broad said this week.

Given Coles’ comments in relation to heavy discounts on fruit in over-supply, citrus growers in particular will be keeping a very close eye on prices over coming months.

The high Australian Dollar and increased treatment costs in the wake of a shocking fruit fly season meant large quantities of citrus usually destined for export markets instead appeared on the domestic market.

Murray Valley Citrus Board chief executive, Hugh Flett, said the issue would be discussed at the Board’s February meeting, next week.

Mr Flett said that while Coles has made assurances growers wouldn’t be disadvantaged, the citrus industry would be keeping a close watching brief on the situation.

“Coles has stated in the press that growers would not be disadvantaged by these discounts,” he said.

“We would like to believe that, but history has shown that on occasions, a decrease in prices means a decrease in prices paid at the farm gate.”

Mr Flett said that on the domestic market about 70 percent of citrus went to supermarket chains – Coles, Woolworths and IGA.

Meanwhile, despite not being in the same position as the citrus industry, table grape growers were similarly cautious in the wake of this week’s announcement by Coles.

Australian Table Grape Association chief executive, Jeff Scott, said while table grapes weren’t in over-supply, the industry would be closely monitoring prices.

“We would be very disappointed if Coles were to include grapes in their heavily discounted lines because of the impact it could have on growers,” Mr Scott said this week.

“If they’re going to slash the price of grapes, you would hope that this price cut would not be passed on to growers.

“The suppliers of grapes would need to look at their margins without passing the cut onto growers.”

Mr Scott said if grape prices were slashed supermarkets could find grapes hard to find.

“The end result may be that growers would need to look more at export markets due to the higher prices they would receive and this would be a loss to Australian consumers because grapes simply wouldn’t be available,” he said.

“Growers would instead be going to export markets where they get rewarded for the hard work they put in to produce good quality fruit.”

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