Retail giant Coles flatly rejects claims that cutting the prices of its fruit and vegetables is causing lower farm gate returns
By Anna Game-Lopata | February 7, 2012
Coles has flatly rejected claims that cutting the prices of its fruit and vegetables is causing lower farm gate returns.
The retailer hit back at Australian Food and Grocery Council (AFCG) claims this week that it slashed fruit and vegetable prices by 50 per cent as part of escalating price wars with competitor Woolworths.
Coles spokesperson Jon Church
tells SupplyChain Review
the latest
price cutting campaign was motivated by near perfect growing conditions for Australian growers.
“There is an abundance of fantastic quality Australian fruit and vegetables,” he says.
“We are helping our growers get their product to market by buying as much as we can get on our shelves at great prices for customers.”
But AFCG Chief Executive Kate Carnell argues heavy discounting raises serious concerns about the viability of primary producers and food manufacturers as price pressures are being felt right along the supply chain.
“We’ve already seen the impacts on farmers and manufacturers from Coles’ ‘Down Down’ campaign, which started with $1 a litre private label milk and expanded to other everyday essentials such as bread, eggs, olive oil and toilet paper.
“The latest fresh produce discounting will be another blow to suppliers who are already struggling with higher costs of power and wages and the challenge to compete with cheap imports.”
Carnell has used Coles’ latest price cutting campaign to call on the government to appoint a Supermarket Ombudsman, who would enforce a legislated Fair Trading Code of Conduct.
“Supermarkets are expecting manufactures in all categories to accept no or very small price increases to subsidise their new low prices,” she says.
“The Ombudsman would help create a more level playing field for primary producers and manufacturers in their dealings with major supermarkets.”
Carnell says an Ombudsman would also ensure branded products would continue to have access to supermarket shelf space on a fair and equitable basis and have reasonable access to market.
“Manufactures are finding it hard to compete with growing levels of private label products, which are forecast to rise in Australia from 25 per cent to more than 40 per cent by 2020,” she says.
“Private label products are increasingly being sourced offshore to get lower prices.”
“The Ombudsman would have the power to fine or ‘name and shame, if a supermarket abused their power by not complying with the Code,” she says.
However Coles strongly denies its price reduction initiatives are negatively impacting producers.
Jon Church says there is no need for a supermarket ombudsman.
“We work openly and in partnership with our suppliers so that any issues are dealt with as part of a normal relationship,” he says.
“If a supplier believes they have been dealt with unfairly the Competition and Consumer Act and the existing supermarket industry code provide adequate protections and review mechanisms.”
Church says special price offers do not force down growers’ returns.
“Price initiatives are flexible, will change weekly, and will be on different produce lines in each state,” he says. “This way, we can collaborate with our growers on which produce lines to discount in any each week in each state.
“Clearly we can only speak for our own supply chain and cannot take responsibility for the actions of other retailers,” he says.
Coles General Manager for Fresh Produce Greg Davis adds Coles is acting responsibly and fairly and its farmer suppliers are pleased with what the company is doing.”
“We have also heard from many growers who support our call for customers to buy more fresh fruit and vegetables to help them shift the huge volumes of top quality Australian fruit and vegetables currently available.”