The bullying behaviours and fear campaigns used by the major supermarkets to wield complete power over suppliers is still getting in the way of the Senate Inquiry into the issue.
The Australian Competition and Consumer Commission (ACCC), the Australian Food and Grocery Council (AFGC) are collaborating on the Inquiry into the anti-competitive practises of Coles and Woolworths.
The decision to take the matter to the Senate came after the dairy industry voiced its concern over the milk price wars which resulted in both the major supermarkets selling milk for just $1 a litre, pushing farmers out of the industry as they struggled to make a living on such small payments.
Countless Australian food companies are either closing down completely or moving their operations overseas, as the influx of private-label products on supermarket shelves leaves them with two choices.
They can try to compete with the supermarkets who are able to sell similar products at ridiculously low prices because of the power they have over suppliers, but the chances of surviving, let alone making profits, are slim.
Or, if you can’t beat ‘em, join ‘em. Many Australian food companies have reluctantly agreed to cease operations as they were and instead use their factories and workforce to supply products for the supermarkets’ private label products.
But if they thought were at the mercy of the supermarkets before, they haven’t seen the worst of it until they relinquish any kind of control they had over their destiny by signing such an agreement.
Because when Coles and Woolworths decide they want to put a product on special, or they need a huge amount of a certain product, you have to deliver.
And if a company can’t deliver on time, or at the price they want to sell the product at? Too bad, Coles and Woolworths say.
“Invariably they say it is not absorbed by the grower or the manufacturer when they cut the prices but in the end it always does,” Jennifer Dowell, National Secretary of the Australian Manufacturing Workers’ Union Food Division, told Food Magazine.
“Companies can’t even transport their own stuff to Coles and Woollies!
“They transport it for you and then just bill you with their high transport prices later.
“And they won’t store stuff that is within a certain timeframe from its use-by date.
“They make the producers store it then tell them they need it within so many hours.
“So producers are in this quandary where they can’t afford to produce stuff and keep it in storage because if Coles and Woollies decide they don’t want to take it they are out of pocket.”
“They have to produce everything at such short notice so they are never able to get a long term view and a stable situation at their factory.”
Nobody willing to speak up
Dowell said the fear campaign the major supermarkets operate with makes it impossible for food companies to criticise them.
“The public doesn’t have enough information about what’s really going on in the industry.
“It’s completely ridiculous that they can’t come out and publically say ‘Coles and Woolworths are killing us’ because they just ensure that they will go out of business.
“If you publically criticise Coles and Woollies, your products will just no longer be put on the shelves, and they’re getting away with that!”
Countless food producers and farmers have discussed the impact of the supermarket dominance with Food Magazine, but almost all are too afraid to go on the record with such claims.
With Coles and Woolworths controlling 80 per cent of the grocery market in Australia, if one or both decided to stop stocking a companies’ product, it really has nowhere else to turn.
Journalists and workers in the industry are all too aware of the dire situation our food sector is in, but nobody is willing to put their name or company to the claims.
The ABC’s Lateline made over 100 calls to get comment from a food producer, and when they did find one willing, he would only speak with the promise of anonymity.
“But after more than 100 phone calls, just one Australian supplier was willing to speak to Lateline about alleged abuses of power by Coles and Woolworths as long as we agreed to hide his identity, like this, (vision shows unidentifiable silhouette of man) and even hide the kind of product he supplied,” Margot O’Neill says in the story.
“But after sleepless nights the supplier pulled out, leaving us to use only his words about why he’s so scared.
“ANONYMOUS SUPPLIER (male voiceover): "It’s quite common for the majors to stop dealing with a supplier … and suppliers to have little chance of a viable business unless they’re serving the two major supermarkets, … so it’s too big a risk to expose myself.
“But I think the power of the big supermarkets is now too large for the proper functioning of our food supply."
“Without doubt there is a climate of fear when it comes to farmers and food processors speaking out about practices of the big two,” Nick Xenophon, Senate select committee food processing, told the ABC.
“When farmers and food processors tell me that they feel a bit like medieval serfs, they’re beholden to Coles and Woollies as their medieval landlords, then you know there’s something seriously wrong.”
Something has to be done
When asked if she would support a Supermarket Ombudsman, as suggested by the Australian Food and Grocery Council (AFGC), Dowell was welcoming of the idea.
“I’ll support anything at this stage!” she told Food Magazine.
“We have been talking about this for years and I’ve watched it get worse and worse.
“They own just about everything; they’ve got petrol, pharmaceutical, pokie machines and alcohol so essentially they have this massive political influence so they intervene in those areas too.”
With so much control over various industries and governments in Australia, the scary reality is that the major supermarkets may not be stoppable, at least not without specific laws and regulations to stop the behaviours.
“If we get more powers given to the ACCC, any power to an Ombudsman, and get people the ability to raise issues without losing their job, then that is a step in the right direction, because right now they cannot,” Dowell explained.
“My concern is that if we lose food sovereignty, if we lose control of our food chain we become hostage to other countries supplying our food.
“How ridiculous is that? In Australia we have the ability to produce the best food in the world, so how are we getting into this situation?
“Once these companies go, they won’t some back, they’re not going to come back and rebuild factories and businesses because Australia is upset after it basically kicked them out in the first place.
“If we rely on imports, and a country decides it is going to give its own market priority, as it very well should, what do we do? Where do we go?
“At a time when the world is saying Africa needs to have food sovereignty, we’re actually participating in a process where we won’t be able to feed our own people.
“We will be reliant on importing food.
“When we finally hit the wall and find that everything is coming from overseas and we no longer have any Australian food industries, it will be too late.”
How concerned are you about the power held by Coles and Woolworths? How do you think they can be stopped?