Not OK, The Price Isn’t Right

23 Jan 2008

Australian farmers have welcomed the federal government’s decision to conduct an inquiry into national grocery prices. The government has asked the consumer regulator, the Australian Competition and Consumer Commission (ACCC), to undertake a comprehensive investigation into food prices — from farm to supermarket.

Growers say they have been protesting for a long time about the vast discrepancy between the rate they receive for their produce and the final retail price. They believe their failure to negotiate a fair price is a direct result of market dominance by two major supermarket chains, Coles and Woolworths, which control around 78 percent of Australia’s $74 billion grocery market.

Jan Davis, CEO of peak horticulture organization Growcom, commented that the inquiry was essential, as farmers have been left out of pocket for far too long.

‘If you look at retail food price rises over the last four years,’ said Davis. ‘they’ve risen around about 17.8 per cent which is much, much higher than inflation, many, many times inflation, whereas the prices received by farmers have only risen 2.3 per cent, and that’s much, much lower than inflation’.

Figures compiled by the federal parliament show food prices rose by 43.6 per cent over the decade between 1996 and 2006 — about double the pace of growth in the United States, Canada, France and Italy and four times that in Britain.

Major retailers argue that they have actually absorbed significant rises in the costs of basic items, such as grain and dairy produce. This is due to the effects of ‘drought, global export demands and increasing competition from biofuel,’ according to a spokesperson from Woolworths, who went on to add that, ‘These factors have combined with increased operating costs such as record oil prices and increasing energy charges [and] have impacted on transport logistics and chilled storage costs’.

Dick Wells, CEO of the Australian Food and Grocery Council, says the food manufacturing industry has also incurred higher energy and transport costs.

‘If anything, retailers have kept a lid on prices. We don’t represent retailers, but manufacturers have been trying to seek to retrieve those costs, and retailers are very sensitive to consumer sentiment about price increases.’

The ACCC will carry out an investigation into food pricing over the next six months, looking at meat, poultry and manufactured food products, as well as fruit and vegetables.

Sydney Morning Herald

ABC News

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