Farmers have welcomed news the Australian Competition and Consumer Commission (ACCC) will conduct an inquiry into Australia's supermarket sector, including pricing practices.
Key points:
- Farmers say the current food supply chain model is a "broken system" that gives supermarkets too much power
- The ACCC says it will use a full range of legal powers to conduct a detailed examination of the supermarket sector
- Woolworths Group CEO Brad Banducci said he welcomed the "opportunity to assist the ACCC with its inquiry"
On Thursday, Prime Minister Anthony Albanese announced Treasurer Jim Chalmers would direct the ACCC to conduct the 12-month review, which will investigate the difference between farmgate prices and check-out prices.
National Farmers' Federation President David Jochinke said a long-term, whole-of-supply-chain solution was needed from the inquiry, not just a "silver bullet" aimed at the major supermarkets.
"When we talk about supermarkets — yes they're important, they are concentrated within Australia and they need to be investigated, but the whole story goes beyond that," he said.
"We've got to be careful not to just find a silver bullet solution to solve this overnight for this big issue.
"How do we ensure that we've got food security at an affordable price for the next decade, if not longer. That has to be done in a strategic manner.
"There are a lot of gaps that need to be solved — the grocery code is only one link in a very long chain. What we want is a whole-of-supply-chain investigation."
'Broken' system
President of the Bowen Gumlu Growers' Association and northern Queensland farmer Carl Walker said he hoped the government was "fair dinkum" about the inquiry.
"I think the whole system is a little bit broken, from the farmers right the whole way through the [supply] chain," he said.
"[The supermarkets] are so focused on their corporate bonuses, they forget about the normal mums and dads out there ... they need to be able to eat good food at a good price and we as farmers need to be paid for that food.
"Allowing three major corporations to control 74 per cent of our food, I think, is wrong and we should look at that."
Mr Walker said he understood businesses needed to make money, but believed supermarkets had too much power.
"They are controlling the people of Australia, what they eat, how they eat and what they pay for it, purely on the pretext that they've got to look after their shareholders," he said.
"I think that's not a very Australian thing to do and the supermarkets need to be pulled into line."
Price discrepancies
ACCC Chair Gina Cass-Gottlieb said the inquiry would examine competition in the supermarket sector and how it had changed since the ACCC’s last inquiry in 2008.
"We know grocery prices have become a major concern for the millions of Australians experiencing cost of living pressures," she said.
"When it comes to fresh produce, we understand that many farmers are concerned about weak correlation between the price they receive for their produce and the price consumers pay at the check-out.
"We will use our full range of legal powers to conduct a detailed examination of the supermarket sector, and where we identify problems or opportunities for improvement, we will carefully consider what recommendations we can make to government."
Mr Jochinke said farmers were questioning discrepancies between the payments they received and the prices consumers paid.
"We want transparency around that and we want the ability for both farmers and consumers to be able to make informed decisions about how they either spend their money or time to grow or buy the produce," he said.
Mr Jochinke said fruit and vegetable growers were likely to benefit the most from the inquiry.
"There is no doubt that the fresh food market is one of the most vulnerable production services," he said.
"When you've got a perishable good, you are forced into scenarios where the supply and demand equation doesn't allow you to find a better solution [than selling to the supermarkets].
"However, other products like the meat industry and the processing industry in general need to be investigated to make sure we've got the most efficient system possible."
'A raw deal'
Mr Jochinke said he hoped the inquiry would investigate the contracts between supermarkets and smaller-scale producers.
"Farmers haven't got the ability to negotiate against larger organisations within the supply chain," he said.
"They can basically make you take it or leave it or give you few options to be able to get your food to market.
"Those circumstances where farmers are getting a raw deal, [we're hoping] those can be exposed and contracts can be more favourable for producers."
Woolworths Group CEO Brad Banducci said he welcomed the "opportunity to assist the ACCC with its inquiry".
However, it is unlikely food prices will come down before the inquiry hands its final report to the government in February 2025.
"But hopefully we'll start by having conversations, making people more aware of where their food comes from and when you purchase food who you're supporting and what the value of the produce is that you're buying," Mr Jochinke said.