Supermarket price wars lands tomato processor into administration

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The abuse of market power and predatory pricing by Australia’s two major retailers has led to the largest tomato grower in the country going into voluntary administration.

Hundreds of people are employed at the SP Export farms in southern Queensland during its peak growing periods, and 60 have already lost their jobs, the ABC reports.

The company is now under the administration of Korda Mentha, saying it owes $12.5 million to creditors.

John Brent, chair of industry group Ausveg, told the ABC times are extremely tough for fruit and vegetable farmers.

"There are some major suppliers who are finding it extremely difficult to contend with the increasing costs that they incur and the difficulty in dealing with the supermarket chains," he said.

Earlier this month, Food Magazine spoke to AusVeg spokesperson Simon Coburn, who agreed the decision by Coles to slash produce prices in half “has the making” of the milk price wars, which started over a year ago and are still impacting Australian dairy farmers.

“Woolworths is not going to sit back on this, they will get on this quick and it will come down to who is cheap so it definitely has the potential to be the next milk wars.”

“Long term this could deliver lots of damage to the industry.

“Depending where the reduced retail price is going to be absorbed, whether it’s a small grower or a big business, this will damage them long term.

“Eventually it will come back to growers and that’s where they’ll get into trouble.

“These prices aren’t sustainable if they’re passed onto growers, small operations and even big ones won’t survive this.

Earlier this week Jennifer Dowell, Australian Manufacturers Workers Union Food and Confectionery Division National Secretary told Food Magazine that addressing the treatment of companies by the supermarket giants needs to be a top priority.

“In the case of the duopoly of Coles and Woollies, the anti-competitive practices that go on are appalling, their behaviour is disgraceful and the ACCC needs to have more power to deal with it.

“[Senator] Kim Carr referred some incidents to the ACCC, but I’ve spoken to the ACCC as part of the process and encouraged manufacturers to speak to them, but the problem is that if you look at the legislation, there isn’t a lot they can do.

“Once you’ve achieved market dominance as they have through their creeping acquisitions, there’s not a lot of power for the ACCC.

“The food processing industry in Australia is captive to the duopoly, they don’t have control of their destiny whatsoever, the decision Coles and Woolworths make they just have to go with.
“There is increasing pressure to cut costs and to produce for private label so they’re being pushed to the wall.

The ACCC did announce yesterday, however, that it would be investigating claims of anti-competitive practises by Coles and Woolworths, and the only way they may learn their lesson is through criminal charges and imprisonment.

”The only way that you are going to get compliance with an act is if people see that it is being enforced,” he said.

“I think it is going to be an unfortunate day all-round when we have to take criminal action in relation to cartels, but if that is what it takes then that is what is going to have to happen.”

But the bullying behaviour of the supermarkets means very few companies or individuals will speak publically about their treatment.

“Things are really difficult because people in the industry will not talk publically about Coles and Woollies and the industry will not talk publically about Coles and Woollies because if they do, you can be sure those products will disappear from the shelves.”