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“We are now questioning how retailers may be manipulating free market conditions by using supplier agreements as one tactic to purposely ensure oversupply.”
Further exacerbating this issue, the grower groups say, is the nature of many agreements between suppliers and supermarkets, which the QFVG said are often not contracts but supplier agreements, and sometimes no formal agreements at all.
“For those who do have an agreement, these contain indicative production volumes without pricing or volume commitments. The agreements also have many exit options for the supermarket usually based around price, quality, and service,” the grower group stated in its submission.
The NFF’s Horticulture Council said almost all prices and volumes were determined on a weekly basis, from a few days to a week out from the harvest window. Growers and suppliers submit a price and volume to the supermarket on Monday, and on Tuesday supermarkets will come back with the price and volume they’re willing to buy produce for.
“This allows supermarkets to offer ‘take it or leave’ pricing,” said the NFF.
In a statement, Coles said it highly valued relationships with farmers.
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“Coles agrees volumes in advance with its suppliers. We generally agree these a season in advance, which allows our suppliers to grow crops with certainty, while not creating an oversupply. It also gives Coles’ customers the confidence they will be able to buy in-season produce from our stores at great prices.”
Woolworths pointed to its own submission to the ACCC inquiry, which said growers are given long-term forecast estimates on volumes required.
“We then negotiate specific volumes and pricing with our supply partners each week due to the highly variable nature of supply volumes,” its submission stated.
Fruit and vegetable prices are largely driven by supply and demand, which is in turn impacted by growing conditions and weather events, Woolworths said.
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“Almost all our suppliers submit pricing quotes every week as the market responds quickly to dynamic fruit and veg supply volumes. Products with less volatility in production, such as packaged salads or mushrooms, have contracted pricing in place to allow for longer-term planning with our supply partners and their suppliers.”
The ACCC will issue its interim report on the supermarket inquiry by August 31 and is expected to issue its final report by February 28.
Multiple inquiries have been held into the supermarket sector amid the rising cost of living. A Greens-led Senate inquiry into supermarket prices earlier this year made 14 recommendations, including the creation of a new regulator to target anti-competitive practices, powers to break up big supermarkets, a strengthened food and grocery code of conduct, and the closer examination of land banking practices.
The federal government has three months to respond to the Senate inquiry’s recommendations.
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