UK govt launches traffic light labelling

The UK government has officially introduced the controversial traffic light labelling system on packaged foods.

Last year there was much debate within the Australian food and packaging industry over the design and layout of a mandatory front-of-pack nutritional labelling scheme.

The government pledged almost exactly a year ago that it would have a design ready in one year’s time, but currently there is no sign of such a scheme.

It did say at the time that it would not be the traffic light system, which the Australian Food and Grocery Council deemed “too simplistic to work.”

But the UK government obviously has a different view, with the Public Health Minister, Anna Soubry, unveiling the scheme with the promise that shoppers will be able to make “healthier choices” about the food they buy.

The labels, which are intended to be in use by the next UK summer, will combine the traffic light colour-coding along with other information.

The new labels will also show how much fat, saturated fat, salt, sugar and calories are in each product.

Currently the system is voluntary for UK but the local Department of Health (DH) has carried out a three-month consultation with retailers, manufacturers and “other interested parties” on what the consistent, clear front of pack label should look like, according to The Telegraph.

Up until now in the UK, where private label saturation is even higher than in Australiam supermarkets have used their own systems, to display the information. 

The DH believes this system is confusing for consumers and that the new labelling scheme will harmonise the industry. 

“The UK already has the largest number of products with front of pack labels in Europe but research has shown that consumers get confused by the wide variety of labels used,” Soubry told The Telegraph.

“By having a consistent system we will all be able to see at a glance what is in our food. This will help us all choose healthier options and control our calorie intake.”

The UK has a very similar problem with obesity as Australia and Soubry said the current cost to the public medical organisation the National Health Service (NHS) is costing one billion pounds each year.

“Making small changes to our diet can have a big impact on our health and could stop us getting serious illnesses – such as heart disease – later in life,” she said.

Almonds contaminated with Salmonella recalled Australia-wide

Food Standards Australia New Zealand (FSANZ) have issues a recall on Woolworths’ and Flannerys’ private label raw almonds over salmonella contamination.

FSANZ has urged consumers to check their pantries for the raw almonds sold as Woolworths Almond Kernals and Flannerys Own Almonds, supplied by Select Harvests, after almost 30 cases of salmonella were linked to the product.

The potentially dangerous Woolworths almond kernels have best before dates of 05/02/13, 06/04/13, 07/04/13, 12/04/13 and those sold as Flannerys came in 500g and 1kg bags with best before dates between 02/07/13 and 05/10/13.

There have been 27 confirmed or suspected cases of salmonellosis linked to the recalled products throughout Australia.

FSANZ Deputy Chief Executive Officer Melanie Fisher said state, territory and federal government authorities are currently investigating an outbreak.

“There have been two recalls associated with this outbreak, one conducted nationally by Woolworths and one in southeast Queensland by Flannerys ” she said, adding that consumers should check the brand of almonds in their pantry and if the product had been recalled they should either dispose of any remaining product or return packets to the place of purchase for a full refund.

It has also been advised that if consumers have almonds in their pantry in containers and are unsure of the source then they should consider disposing of the product.

“The food recalls were notified earlier this month but we want to ensure consumers are carefully checking their pantries as packaged raw almonds are often bought to use later,” she said.

Symptoms of salmonellosis include diarrhoea, fever, and abdominal cramps 12 to 72 hours after eating contaminated food.

The illness usually lasts 4 to 7 days and most people recover within a few days, but the condition can be deadly for children under five years of age, older people and people with weak immune systems.

FSANZ has advised that anyone who has become ill from eating raw almonds should consult a doctor and consumers with the potentially contaminated products should not consume them, but rather dispose of them or return them to the place of purchase for a full refund.

 

Woolworths reports big sales growth

Woolworths Limited has reported a huge first quarter, boosted by its supermarket and liquor dominance in the Australian market.

Sales in the period were up almost 5 per cent from the same period last year, and above “comparable store sales for the quarter [which had] increased 2.3%.”

From last year’s first quarter sales of $12 564 million, this year the group saw $12 993 in sales in the same period, attributed to an increase in the supermarket giant’s market share and increased consumer numbers and sole items.

The recent commencement of Sunday trading in Western Australia, which began at the end of August this year, has also been a contributing factor the increased sales.

While sales were up, Woolworths reported a fall of almost 3 per cent in average prices, which it says is resulting in “customers taking advantage of the fact that Woolworths continues to lower its prices for their benefit.”

But while the price of a number of items may be down for the average shopper, many don’t understand the impact of the price war on the food industry and its future.

Food manufacturers and producers are going out of business and struggling to make ends meet as they find it impossible to compete with cheap imports.

But experts have warned that the prices are unsustainable, as once the Australian dollar goes back down, prices of imports will increase and there will be fewer Australian companies able to provide food.

Woolworths opened eight Australian supermarkets during the quarter, meaning they now have 879 throughout the country, while the opening of six new Dan Murphy’s took the total to 165.

Smaller retailers have criticised the supermarket giant’s determination to continue opening new stores, saying they are opening larger than necessary outlets in a deliberate bid to wipe out competition.

Overall, the Woolworths group sales increased more than 4 per cent in the quarter, bringing it up to $15.2 billion for the quarter.

Chief executive Grant O’Brien said online sales had increased by 30 per cent for the quarter.

“This was a pleasing start to the year with momentum created towards the end of the last financial year continuing through the first quarter,” he said.

“While we have made progress against our strategic priorities, there is still a great deal to do in our business transformation programs.”

Woolworths removing additives from breads baked in-store

Supermarket giant Woolworths has announced that more than 70 lines of its bread bakes in store will soon be free from artificial colours, flavours, emulsifiers and preservatives.

Woolworths said the move was indicative of consumer demand for “more natural products.”

The will further increase the power and presence of the private label brands on supermarket shelves, which has seen major bakers in Australia struggle to compete with the major supermarkets.

Goodman Fielder and George Weston Foods have reported difficult trading conditions as a result of the supermarket price wars.

In June, Goodman Fielder announced that it would be forced to slash more than 500 Goodman Fielder jobs across Australia as it restructures the business to reduce costs.

'It is expected that 115 roles will be removed from the baking division as a result of the consolidation of the three bakery facilities,' Goodman Fielder said in a statement.

'This brings the total number of roles removed across the company to 541 this financial year.'

As the impacts of the drought across the US began to show in the form of increased grain costs, Goodman Fielder revealed it regrets its choice to manufacture $1 bread for the Coles private label, as it is already unprofitable.

Like so many other industries, including the dairy, produce and food manufacturing, the bread sector is suffering the impacts of being forced to sell their products at prices less than the cost of production for the sake of supermarket private labels and their war on price.

“Dollar bread is at a loss,” managing director Chris Delaney said.

''This was not a good investment and I wouldn't do it again if I had a choice.”

Countless industry insiders and experts have labelled the current private label environment as unsustainable, as farmers and manufacturers leave their sectors because they can’t break even, let alone make a profit.

While Goodman Fielder says the flow on effects of the grain price increases will flow on to consumers, it remains unclear whether the supermarket giants will actually change the shelf price.

They could absorb the costs within their own businesses, but if past experience is any indication, that would be unlikely and it would be more probable that the bread companies and others impacted by the cost increases would absorb the costs within their already struggling structures as Coles continues to sell bread for $1.

The baking company’s private label contract with Coles is up for renewal in the first half of 2013.

The latest announcement from Woolworths, which will include new bread recipes that will see vegetable emulsifiers 471, 472 and 481, acidity regulator 297 and antioxidant 306 removed from the fresh bread that is baked in 560 Woolworths stores every day.

“ Our customers have provided very clear feedback that they are concerned about additives in their food, so we have made our in-store baked bread free from these artificial additives,” Alex Holt, Woolworths’ Head of Bakery said.

“Parents are particularly concerned about the presence of artificial flavours, colours, emulsifiers and preservatives in the food they give their kids, so we are proud to be able to say that Woolies’ fresh baked bread is now free from these additives and reassure our consumers that they can feel good about purchasing it.”

Aussies buying less private label products

In a small win for Aussie food companies, big-brand grocery item purchases have increased, while private label products have decreased.

A new Neilson poll shows that private label grocery items have fallen for the first time in five years.

The big food companies who have been struggling against the rapid increase in home brand products will surely be hopeful the 0.7 per cent drop in private label grocery sales from this time last year is possibly an indication that Australian consumers are committed to keeping these companies alive.

The Nielsen report found ‘household penetration’ of the supermarket’s own ‘home brands’ have dropped from 95.5 per cent in 2011 to 94.8 per cent this year.

The findings back reports in recent months that found nearly half of all shoppers go out of their way to buy Australian-made produce, while more than a third buy Australian wherever possible.

The news comes after previous studies earlier this year found the number of private label products being purchased in Australian supermarkets is increasing.

The report also found that while consumers are becoming more dedication to food brands, they are not demonstrating the same loyalty to the supermarkets, with the rate of cross-shopping increasing to over 88 per cent in 2012.

Supermarkets ‘providing an enjoyable experience’ and ‘staff service’ were factors impacting store loyalty, Nielsen Retail Industry Group Executive-Director Kosta Conomos explained.

“As retailers continue to focus on the same initiatives such as private label, loyalty reward cards or low shelf prices, shoppers are increasingly seeing them as ‘hygiene factors’.

“Unless further differentiation occurs among Australian retailers, we’ll continue to see very high penetration levels and cross-shopping, with low levels of loyalty.

Wal-Mart offers discounts on healthy foods: should Australia follow suit?

America’s largest supermarket has teamed up with a leading insurance company to offer healthy foods at a reduced price.

Supermarket giant Wal-Mart’s collaboration with Humana Insurance will allow eligible shoppers to get a 5 per cent discount on healthy products, such as fresh fruit and vegetables and low fat dairy.

All the eligible foods, including eggs, wholemeal bread and almonds, will be marked with a “Great For You” icon, allowing shoppers to easily spot the discounted, healthy products.

The offer, to start 15 October, will be available to more than 1 million eligible customers currently covered by Humana insurance.

The grocery giant said the move is part of its plans to make healthier foods more accessible for Americans, which have the highest rate of obesity in the world.

Last year it announced plans to lower salts, fats and sugars in thousands its private label products and agreed to cut produce prices by 2015.

Australian is also struggling with its collective weight, with latest figures showing one in three children and one in four adults is overweight or obese.

The Food and Grocery Council (AFGC)’s Responsible Marketing to Children Initiative (RMCI) has reduced the number of advertisements aimed at children promoting unhealthy foods, and a number of manufacturers have voluntarily begun reducing sugar, fat and sodium content of products, but the problem still remains.

Many experts believe more education is needed to curb the rise in obesity, which poses a threat to Australia’s healthcare system, which will struggle to handle the rates of obesity-related conditions if current rates continue.

The high price of healthy food choices as opposed to low-cost unhealthy alternatives has also been slammed in Australia and there have been suggestions we should adopt a "fat tax" or "sugar tax" to improve current obesity rates.

Do you think Australia needs a similar initiative to the one Wal-Mart is implementing? Could it help improve the nation’s health?

UK supermarket giant increases price paid to dairy farmers

Following extensive industrial action, UK supermarket giant Tesco has increased the price it pays farmers for milk, albeit only slightly.

Dairy farmers in the UK have embarked on strikes and blockades this year, as they call for the major supermarkets to pay a fairer price for their product.

From 1 October, the 700 dairy farmers who supply Tesco’s private label non-organic milk will be paid an extra 2 pence per litre.

Despite the miniscule increase, the price rise, which brings the possible earnings up to 31.58 pence per litre for farmers, will make Tesco one of the highest payers of the biggest five supermarkets.

Tesco’s rivals Morrisons and the Co-Operative Group have also increased the price they pay for milk to remain competitive.

While Tesco says the price increase was due to bi-annual review, and not a reaction to the protests, the fact that other supermarkets are raising prices is good news for farmers.

The problems in the UK dairy market mirror those being ensured by Australian farmers, but as Australian Dairy Farmers (ADF) director, Terry Toohey, told the Food Magazine Industry Leaders Summit earlier this year, it is not a coincidence.

“Given the sheer size of the supermarket duopoly, over 75 per cent of the market is between the two powers, and they are wielding that Australian marketplace and the majority of Australian suppliers, particularly to the fresh food industry,” he said.

“In the United Kingdom, they have already experience this [impact of pricing on dairy industry].

“This is a Tesco model, the people that have been brought in by Coles have come from Tesco.

“I had to go over there to do a study 4 years ago, and I came back with an alarm bell saying, ‘it’s not what’s going to happen in Australia, it’s when it’s going to happen in Australia.’

“We believe from the grocery supply code of practice, the grocery code could provide a good starting point on the basis of Australia legislation, establish a mandatory code of practice and an ombudsman with the ability to levy financial penalties,” Toohey said.

“We are sure that Coles’ actions impact on the visibility of the brand of dairy products and would lead to less variety of dairy products on supermarkets shelves as has happened in the United Kingdom.

“It’s our organisation’s view that Coles’ actions will ultimately less competitions consumers, decrease product choice as the experience of the UK has shown.”

Toohey told the Leaders Summit that the current supermarket environment is driving farmers out of the business, as they struggle to make ends meet.

“In NSW, my state, I see farmers being asked to sign contracts for 3 cents a litre than their previous contracts," he said.

“This will have astronomical effects on fund and profit margins.”

“In my case I’ll have 40 per cent of my tier 2 of milk [purchased] at 18 cents [per litre].

“The cost of products is 40 cents [per litre].

“So, you start to look and say, I’m only one person, there are 800 dairy farmers in NSW alone.”

Do you think Aussie dairy farmers should embark on industrial action to improve the price they get for their milk?

Farmers question The National Food Plan

With a taskforce touring the country to gain feedback on the plan, many farmers are voicing concerns over the power of the supermarket duopoly as well as over regulation and skill shortages, the ABC reported.

As Food Magazine reported in the July, the National Food Plan aims to ensure that Australia has “a sustainable, globally competitive, resilient food supply that supports access to nutritious and affordable food.”

At the time, Federal Minister for Agriculture, Tony Burke, said the plan aimed to look at all aspects of food production.

“This comprehensive plan will look at food quality, domestic and international food security, how to streamline business regulations, and ensuring there are appropriate economic, taxation, labour market and education policy settings for a strong food production system.”

However, with farmers still feeling the pinch from the supermarkets, and with the slow-moving pace of any real change, many are questioning the effectiveness of the plan.

Alex Arbuthnott, chair of Agribusiness in Gippsland, says that although the plan is a little late it is a step in the right direction but warns due to supermarket discounting wars, poor seasonal conditions and high export prices Gippsland farmers are doing it tough.

"The Australian farmer at the moment is experiencing very, very difficult conditions and particularly with the price for milk," he said.

Beef farmer Geoff Stephens spoke out about the way in which famers are being bullied by the supermarkets and said it’s a matter of ‘fall into line or fall out.’

"I hope that the Government realises that farmers have to make a profit, we can't go on being below cost production agents in the chain," he said.

To learn more about The National Food plan, click here.

ACCC pledges to crack down on supermarket dominance

The Chairman of Australia’s competition watchdog has come out swinging over competition in local markets including the food industry.

Chairman of the Australian Competition and Consumer Commission (ACCC), Rod Sims, outlined the current ACCC priorities at the Australia Israel Chamber of Commerce’s Business Leaders Lunch in Perth yesterday.

According to Sims, of the 40 to 50 cases the ACCC always has in the Federal Court, about a quarter is related to competition.

“We currently also have 35 separate investigations underway into misuse of market power, cartels, or cases involving a substantial lessening of competition,” he told the audience.

“While these cases are complex, and take considerable time and resources to investigate and then prosecute, the deterrent effect of our work is substantial.”

As part of the ACCC’s bid to improve competition in Australia, which would include taking on even more competition cases, he outlined a strategy it would be using.

It will be focused on the online economy, cartels and misuse of market power and other anti-competitive behaviour, especially in concentrated markets, such as the supermarket industry.

In terms of the digital and online markets, which the ACCC has outlined as a key priority after a strategic review this year, as it poses two of the biggest regulatory challenges.

Digital marketplaces

They are ensuring consumers enjoy the same protections in the digital and online economy as they do in other environments, and making sure there is fair competition in the digital and online economy between new and innovative competitors and their older counterparts.

“We are examining whether certain current bricks and mortar leading firms are seeking to prevent online competition in ways that breach the Competition and Consumer Act (CCA),” Sims said.

“I recently heard one such retailer claiming that bricks and mortar incumbents will dominate online shopping in future and see off completely new solely online competitors.

“It would be a missed opportunity for competition if this became the inevitable outcome.

“Our cases against Ticketek and Flight Centre are two prime examples of our enforcement work to ensure competition online.

“A related case is our successful court action against Apple for misleading consumers about Apple 4G iPad’s capacity to connect to the 4G network in Australia which also has competition implications.

“Other firms, Samsung for example, sell tablets which compete with the iPad and which can connect to Australia’s 4G network.

“Those firms are entitled to compete in a market that is fair in terms of the claims that are made about what the devices can do,” Mr Sims said.

Sims also discussed the misconceptions cartels have about legal conduct, saying the key focus area for the watchdog could result in prosecution.

“Combating the damage cartels wreak on other businesses, consumers and the economy has been a major ACCC priority for some time,” he said.

“For over a year now we have been taking a more proactive approach to cartel conduct, following results from the 2010 Melbourne University Law School research that showed 58 percent of businesses don’t know that fixing prices, rigging bids, sharing markets and restricting supply is a criminal offence that can result in a 10 year jail sentence and of the 42 percent of businesses that understood the potential criminal nature of cartel conduct, almost one in 10 said they’d still be likely to join a cartel if the opportunity arose.”

“Our proactive enforcement and education program aims to bed down the new laws and increase awareness of them.

“We have 10 current cartel enforcement matters before the Federal Court.

“We have a number of active cartel investigations currently underway.

“We have conducted a direct mail and email campaign to targeted and general industry sectors informing them of the criminal penalties and how immunity can free them from prosecution.

"This includes letters to 2,500 executives in the heavy construction and construction supply industries.

“We have made and distributed a short film called The Marker that shows how involvement in cartels can ruin your business and your life – I have personally sent copies to the CEOs of the 300 top ASX listed companies urging them to show it to relevant employees at all levels of the organisation

“We have gained significant media publicity around our most recent court case and the launch of The Marker”.

Misuse of market power

Sims pointed out that due to the size of the country and our distance from other markets, there are many concentrated markets in Australia, and the misuse of market power must be stopped.

He said the ACCC is carefully observing key markets where this is occurring to make sure no mergers or arrangements that substantially lessen competition, are occurring, and where the obvious market power is not misused to prevent or damage competition.

Anyone within the supermarket industry would know that it is one of the markets the watchdog must be keeping an eye on, following an intense couple of years of price cuts and damage to suppliers’ businesses by the big two dominant forces,  and while Sims maintained the markets being targeted are confidential at this stage, he did outline the three most pressing areas.

“Issues relating to the treatment of suppliers by the major supermarket chains,  which include competition issues as well as allegations of unconscionable conduct, business-to-business, which we are keen to pursue generally,” he said.

“Investigating the sharing of information about prices in the fuel retailing sector, and examining the longer term competition implications of the large shopper docket discounts provided between the fuel and supermarket sectors in particular.”

Mergers and acquisitions

The ACCC will be closely monitoring the impacts of potential mergers and acquisitions to ensure they are used for the right purposes – to make companies more efficient – rather than for lessening competition.

“Some of the mergers and acquisitions we review clearly attract a lot of publicity,” he said.

“Understandably, the parties involved in a transaction have an interest in having their merger dealt with as quickly as possible and this can lead to criticism of the length of time the ACCC takes to reach a decision on a proposed merger.

“The length of time our reviews take, and the potential impact on the parties’ commercial time-frames, is something the ACCC is acutely aware of and is taking a number of steps to address.

“The publication of a Statement of Issues is part of the ACCC’s processes that ensure transparency of our consideration of merger proposals.

“We will take account of the reactions from the market and the merger parties to the concerns we have outlined.
“At this stage we aim to make a final decision on this transaction in mid-October.

“Close scrutiny from the ACCC will be particularly the case in concentrated markets.

"As I noted above, we want to ensure that mergers will not result in structural changes leading to a substantial lessening of competition.

“While there are a range of factors to take into account in assessing mergers under section 50, market concentration is a key factor.

“When a merger is a “3-2” – so, when a merger reduces the number of key players in a market from three to two – the parties should not be surprised that the ACCC would want to carry out a full review.

“With only two principal players remaining in a market, each will learn to anticipate the actions and reactions of the other. 

“In these circumstances, the ability of the two remaining firms to raise prices or reduce quality for consumers generally increases.”

What are your thoughts on Sims' comments? Do you think the new plan by the ACCC will improve the food sector? What else needs to be done?

CHOICE survey results highlight country of origin issue in Aussie supermarkets

Consumer advocacy group CHOICE has released the results of their survey into the country of origin of product ingredients comparing home-branded products from Coles and Woolworth’s private labels with leading supplier brands.

This debate has been raging for quite some time, with The Age newspaper conducting an investigation earlier this year that found one in every four grocery items now sold in Australian supermarkets is private label and of those, about one in two is imported.

A poll accompanying the article found that an overwhelming number of respondents would pay more for home-brand products that they knew were produced in Australia from local ingredients.

CHOICE looked at more than 360 products across a variety of grocery categories, including cereals, biscuits, snacks, tinned foods and frozen packaged food, matching private label products with their equivalent market leader.

According to CHOICE, just 55% of Coles’ products and 38% of Woolworths’ products were grown or manufactured locally, compared with 92% of market leader groceries.

According to CHOICE, “for products to claim they are ‘made’ in Australia, the product must have undergone substantial transformation and 50% of processing costs here. If the product includes ingredients from outside Australia, or the specified country of origin, ‘imported ingredients’ must be noted on the packaging, however the exact source of such ingredients is not required”

Coles and Woolworths have faced on-going criticism due to the aggressive promotion and marketing of their private label products, with some brands feeling the supermarket giants have unfairly used their power to promote their own labels over other established brands.

Business information research firm IBISWorld has forecasted that the share of private-label products will account for over 30 per cent of all Australian supermarkets sales by 2017-18.

Read more about the survey at CHOICE.

AussieMite secures national distribution in Coles stores

AussieMite, an Australian-owned option in the yeast-based spread market, has secured national distribution and will now be available in all Coles supermarkets.

Developed as a locally-based alternative to iconic brand Vegemite, which is owned by US company Kraft Foods, AussieMite is a small family-owned business with a local focus.

“We are committed to keeping profits in Australia, using only the best local ingredients, where possible, and with all the packaging including the jar, lid and label, made in Australia” says AussieMite Managing Director Elise Ramsey.

The company seeks to use only the finest, ethically sourced ingredients and avoids chemical additives and preservatives

Coles General Manager of Grocery, Richard Pearson, says: “Coles is delighted to add yet another Aussie-made product to our shelves. We sell more products carrying the Australian Made Australian Grown logo than any other brand in the country and we’re sure AussieMite will be another popular choice for customers.”

Tastiness All in the Eye of the Biscuit-Holder

A new study from the UK has found that biscuits seem tastier when they come in fancy packaging.

UK consumer group Which? asked two groups of tasters to sample and rate chocolate-chip biscuits from the premium, standard and budget range at supermarket chains Asda, Sainsbury’s and Tesco. 

Researchers gave one group cookies in their original packaging while the other group tasted the biscuits blind before being asked to rate the taste and quality of each kind of cookie.

The biscuits that were given with their packaging scored significantly higher overall, and were perceived to taste better than their wrapper-less counterparts.

Eating with our eyes

The experiment clearly showed that our perception of how food should taste is influenced by the way food is packed and the glossy, flawless images adoring wrappers.

According to a panel of experts who were asked to analyse the design of some popular UK supermarket brand ranges, it’s all part of a carefully considered strategy.

The packaging design of some budget ranges seemed like they were designed to put customers off looking obviously ‘cheap’, which could tempt consumers into upgrading to a more premium –and pricier – alternative.

However, with many household budgets stretched thin, supermarkets are putting more effort into making their home brand lines look more alluring.

Here in Australia we’ve seen this happen with the design of many supermarket lines sharing an eerie similarity to their name-brand counterparts.

Unsurprisingly, this has only served to further anger manufacturers who already feel that they are being squeezed out of premium shelf space as supermarkets aggressively promote their own lines as a comparable, yet more economical, alternative.

Dick Smith only wanted controversy: News Ltd

News Limited has offered its perspective on debate over its decision not to include marketing material from Australian entrepreneur Dick Smith in its papers.

David Penburthy writes for The Punch:

“When you walk into the Commonwealth Bank you don’t see advertisements on the walls attacking banks for paying obscene salaries to their executives. McDonalds would refuse to place banners outside its stores stating that Big Macs are rubbish and the Whopper is a superior burger. In a similar vein, News Limited, the publisher of this website, has taken the unremarkable commercial decision not to use its products as a vehicle to trash its reputation.

The person in question is Dick Smith and the material is a 28-page magazine he has written called Dick Smith’s Magazine of Forbidden Ideas That You Won’t Read About in the Mainstream Media.

As a businessman, Smith has harnessed the concept of martyrdom – be it real or imagined – as his preferred marketing technique. He has made millions presenting himself as a nuggetty Aussie battler taking on the big guys, despite being bigger than most in Australian business.

ndeed some of his wealth has come from pinching market share from local businesses, such as the family-owned preserves producer Beerenberg,whose boss said last month that it was struggling to sell its productsbecause of Smith’s posturing as one of the only patriots in the field of jam production.

In a way, the last thing Smith would have wanted was to have his magazine inserted in News Limited publications, as it would undermine his claim of persecution as the basis for making profits. The magazine is so totally out there that it seems he deliberately went overboard to ensure it wouldn’t be carried as an advertisement, as it is filled with conspiracy theories involving Rupert Murdoch’s American citizenship, this company’s (non-existent) refusal to run pieces calling for a smaller Australian population, our alleged bias against climate science, our supposed determination to attack Smith for using patriotism to make money.

Even the independent website Crikey, hardly a friend of News Limited, rana piece by former Media Watch producer David Salter saying it was “not surprising” that News refused to run the insert, and attacking its content as the work of an “egomaniac” falsely claiming a conspiracy.

I would not be so disrespectful as to call Mr Smith an egomaniac, even though, as Crikey points out, there are 29 photos of him in his 28-page insert. He is certainly a conspiracy theorist and his theories do not pass muster.

Smith’s obsession with News Limited is so acute that he misrepresents both our general conduct and our specific treatment of him. A few years ago I heard him on ABC Radio after the Victorian bushfires saying News Limited had never given a cent to charity. I rang the station and asked (fruitlessly) to go on air to point out that in the previous week News donated $1 million to Victoria. I could fill the rest of this column with similar examples, be it families who made the news for tragic reasons, cultural bequests for the arts, money for our State Library, the Pride of Australia awards for unsung community heroes.”

Read the full article at The Punch.

What do you make of the controversy between Dick Smith and News Limited? Who is in the wrong here?

Four’N Twenty expands product range to combat market pressure

Iconic Aussie pie maker Four’N Twenty is diversifying its product range, as the pressure of the supermarket price wars increases and food manufacturing jobs continue to be lost.

Four’N Twenty’s parent brand Patties Foods said last month that the ever-increasing number of private label products in supermarkets will damage the business.

To that end, the company has researched and identified some key areas in need of a breath of fresh air, and have launched products to fill one already.

The Four’N Twenty Brekky Wraps, which will be available at convenience stores nationally, fill a significant gap in the market, according to the company.

“Consumer research shows there was no real breakfast solution in the petrol and convenience market, and Four’N Twenty Brekky Wraps score highly on overall appeal, convenience and purchasing intent,” the company said.

 

Four’N Twenty Brand Manager, Mark Malak, said Four’N Twenty is confident the new options, which are hand made in the company’s Bairnsdale, Victoria facilities, will be well received in the market place.

 

The Four’N Twenty Brekky Wraps consist of either tomato, ham and cheese or sausage, egg, bacon and BBQ sauce in a warmed tortilla wrap and Four’N Twenty Brand Manager, Mark Malak said they are perfect for a hot savoury breakfast on the go.

“Consumers want more choice in the hot food section. We all know it’s important to have a good breakfast – and too many busy people skip it for want of a convenient, tasty and value-for-money option,” he said.

“Brekky Wraps are a totally new offering designed to give on-the-go consumers an attractive breakfast alternative.

“If you’re after a quick, easy and tasty savoury breakfast, Four’N Twenty Brekky Wraps are just the thing.

“We’ve used only the finest ingredients.

“For a true Aussie favourite, there’s a delicious ham Brekky Wrap with chunks of tomato and melted cheese.

“And we have a Brekky Wrap with scrambled egg, a slice of bacon and a seasoned sausage patty glazed with Barbecue Sauce – an offer sure to appeal to Aussie Blokes everywhere.

“Each wrap is hand-folded in a light tortilla wrap, making it easy to eat on the go.

Four’N Twenty Brekky Wraps are available in the hot food section of convenience stores nationally, priced at $4.95.

 {^youtubevideo|(width)425|(height)264|(border)False|(rel)True|(autoplay)False|(fs)True|(color2)#EFEFEF|(cookies)False|(url)https://www.youtube.com/watch?v=krTk6qgaAd8|(loop)False|(color1)#666666|(hd)False^}

Supermarkets are killing farmers: Katter’s address to Parliament

Controversial Queensland MP Bob Katter has slammed the actions of Australia’s largest supermarkets, saying the market share between the big two is unsustainable and killing farmers.

“In 1991 in Australia, two supermarket giants had 50.5 per cent of the food market,” Katter told the Federal Parliament on Wednesday.

“In 1999, John Howard, the Prime Minister, agreed to an inquiry.

“By that time the market share of the two supermarket giants had risen to 65 per cent.

“Everybody knew that their market share was shooting through the roof.

“The inquiry, comprising all parties, including the Australian Democrats, effectively recommended that nothing be done.

“There were three alternatives.

“One was, as the National Association of Retail Grocers of Australia, or NARGA—the independents—asked for, a capping at and divestment down to 22 per cent of market share for each of the giants.

“A second was to go to American trust laws.

“The third alternative was to considerably strengthen the Australian Consumer and Trade Practices Act.

“Not one of the three alternatives was adopted by the committee.

“No-one can read their report—an excellent report, I might add—and not understand that the major parties in Australia are controlled by Woolworths and Coles.

“No other country on Earth would accept this situation.

“Let me give you the figures for other countries.

“The report I am referring to, Fair market or market failure, gives the figures for other countries. “There is not one other country on Earth where the big three have even 25 per cent.

“But in Australia, when this report came out, they had 65 per cent.”

Chemical dangers

Katter said Australia’s free trade agreements are damaging the health of consumers who are unaware of the origin of their food or the way in which it is grown and manufactured in foreign countries.

As Australian Dairy Farmers (ADF) Director Terry Toohey told the Food Magazine Industry Leaders Summit recently, the reliance on imports could leave not only Australian companies and farms out of business, but also pose a risk to consumer safety.

“How can we encourage people to buy Australian products, certainly it appears that they can buy the products cheaper overseas, and they will do so,” Toohey said.

“Some of the issues, as farmer I can relate to are things like apples for example, or oranges, these products that those fruits and veggies are soaking in, we can’t [use] those chemicals here in Australia.

“Yet the imports can come in.

“We use clean water to wash these fruits but some of the chemicals they use over there have been gone for 10, 15 years out of Australia.

“But that’s quiet alright, we have no say and the government just won’t listen to us.”

Katter agreed in his address to the Parliament.

“We cannot sell on the world market because of the massive subsidies from the other countries,” he said.

“It is almost impossible for us to compete on the world market.

“So we come back to the Australian market, and week after week, day after day, product is brought in from overseas.

“Hardly a week goes by where there is not something in the papers about some new commodity coming in from overseas.

“I am told that Woolworths has a whole three-storey building employing people doing nothing else except sourcing cheap food from overseas.”

“We cannot compete in apples.

“I said, 'Hold on, it's America and New Zealand,' and they said, 'Yes, $9 an hour.' We would pay $19 an hour, and so we should, but the wage in the United States in California is $9 an hour, and in New Zealand it is $9 an hour.

“The apples will also be coming in from China, where the average income is $5,000 a year.

“How can we compete against those apples?

“Everybody knows they have fire blight.

“You had the reason to keep them out, but you did not.

“You are so in love and enamoured with and obsessive about free trade that you will bring those apples in knowing that they have been sprayed with streptomycin, antibiotics, to get rid of the disease.

“You know that.

“So I will be moving legislation in this House so that, if you want to bring an apple in from those three countries which have fire blight and spray with streptomycin—because we have no way of checking whether it is sprayed with streptomycin—every apple will have a marker on it.

“We heard the minister stand up today on cigarettes.

“There is a serious danger to our health from these apples.

“Everyone will have a marker: 'This product has not been grown or processed under Australian health and hygiene standards and may be injurious to your health.'”

Katter discussed his disappointment with the current prawn farming industry in Australia, saying they also pose a risk to public health and safety.

“I say with very great pride that, as a minister [in the Qld Government], I have been attributed with the creation of the prawn- and fish-farming industries of Australia—and no doubt my department played a very key role in the establishment of those industries.

“Prawn and fish farming in Australia rose up to $600 million at one stage.

“We have virtually no prawn farming at all now in Australia.

“We thought we would catch Thailand at $2,000 million. Thailand has gone up to $8,000 million; we have gone down to nothing.

“And that is because Woolworths and Coles are bringing their prawns in from Vietnam, China and Thailand.

“In Vietnam they actually use raw sewage in the ponds.

“In Thailand, they put the raw sewage in the river, and in China they put raw sewage in the river and take raw sewage out.

“We have to have pure, bacteria-free water going in and pure, bacteria-free water going out, which is impossible, so forget about any prawn farming in Australia.

“But those prawns are coming in, and we know they are carrying diseases.

“They have to be.

“They are being brought up in a bacterial environment.

“So once again, as far as I am concerned, every single little box of prawns anywhere in Australia will carry that label on it.

“At the very least, that will slow Woolworths and Coles down from bringing them into Australia.”

Unbalanced market share

“Every other country has laws protecting against monopolistic powers—oligopolistic, if I want to be technical.

“Every country on earth has that.

“We have no laws that protect.

“Clearly, if they could rise from 50.5 per cent in 1991, after inquiry after inquiry after inquiry, up to 92 per cent—and these are their own figures, not mine; they are not my figures.

“Every year they claim they have a growth in market share, and I have been tracking them since the ABS series was discontinued and the AC Nielsen series was discontinued.

“There was to be a review in 2002.

“Both series were discontinued in 2002, so we could not prove anything because there were no series there anymore.

“I am not a conspiracy theorist, Madam Deputy Speaker, but it is pretty difficult to write around that one in 2002.

“But, since 2002, Coles and Woolworths have skited to their shareholders about their growth in market share.

“Add that to the 74 per cent they had in 2002 and you have 92 per cent, and we are still doing nothing in this place.”

Katter echoed the comments from various experts within the food industry, who are already noticing the flow-on effects of the reduced farm-gate prices on local communities.

“There will be no newsagents.

“There will be no chemists.

“There will be no florists.

“There will be no bakers.

“There will be nothing.

“They want it all, and this place [Parliament of Australia] has facilitated giving them it all.

“Woolworths and Coles must be acted upon.

“Every four days, a farmer in Australia commits suicide. And that is the note upon which I conclude.”

What do you think of Katter’s comments? Do you agree? Disagree?

Govt needs to stop Coles and Woolworths dominance: lobby group

The representative body for smaller grocery retailers in Australia are again calling on fairer competition in the sector, releasing a report outlining the consequences if regulators and governments don’t step in.

Master Grocers Australia (MGA)’s report “Let’s Have Fair Competition,” says the independent supermarket industry is at risk of being annihilated by the unabated growth of the duopoly, Coles and Woolworths, according to an industry report.

They say unless the Australian Government and the Australian Competition and Consumer Commission (ACCC) take action now, Australians will have no competition in the sector, leading to prices increases and the end of freedom of choice.

The report refers to the enormous growth of the chains in the last decade and how their massive market power has resulted from practices such as anti-competitive price discrimination, store saturation strategies and shopper docket schemes.

“We want a ‘fair go’ for the smaller independents. It’s time to take action against this powerful Goliath that is growing stronger every day,” Jos de Bruin, chief executive of the MGA said.

“If the Regulators sit back and do nothing to foster fair competition in the grocery and liquor retail industry, then the Australian consumer will literally pay the price in the long term.”

Food manufacturers produce growers and farmers have been warning of the same problems for years, but have been forced into silence in recent years as the power of the duopoly means those who do voice their concerns are punished with reduced shelf space or non-renewal of contracts.

The MGA also wants state and local governments to strengthen retail assessment criteria to prevent the major supermarkets from building oversized outlets in small towns that push smaller retailers out of business.

“The independent supermarket industry strongly supports competition, but we want fair competition because without it, there will be no one left to challenge the big retailers and they will become even stronger.”

Earlier today Australia’s largest bread maker, Goodman Fielder admitted its $1 private label bread deal with Coles was unprofitable and unsustainable and managing director Chris Delaney admitted it was “not a good investment and I wouldn't do it again if I had a choice.”

Coles only response on the issue came in the form of a written statement that seemed somewhat threatening in its attitude towards cost absorptions and contracts.

"Coles is happy to review any supplier requests for cost price increases that can be appropriately validated,” the Coles spokesperson said.

In reponse to the MGA report, Coles told Food Magazine "Coles is not in the business of opening unprofitable stores as the Master Grocers Association report claims.

"We only open stores where we believe there is customer demand for our offer.

"Some other points that might be of interest in the debate are store openings.

"Coles has 749 stores. IGA/Metcash (whom the MGA represents) have 1365 stores, and 700 Foodworks stores.

"Metcash’s 2012 annual report advises that they opened 58 new IGA stores in the last financial year.

"In the same period, Coles opened 19 new stores and closed 11."

A Woolworths spokesperson told Food Magazine that “given it’s an industry issue, you need to speak to the industry body,” and would not provide any further comment.

Food Magazine then contacted industry representative body the Australian National Retailers Association (ANRA) for comment, but received only a media release singing the praises of Woolworths and Coles.

"A report attacking Australia’s leading supermarket retailers has been rejected as long on accusations and short on facts, by Australian National Retailers Association (ANRA) CEO, Margy Osmond," it states.

“The Master Grocers Australia (MGA) report is designed to be as sensational as possible at the expense of two highly successful Australian companies, Coles and Woolworths,” Osmond said.

The MGA represents the IGA group of retailers and far from ‘fair competition’, what they recommend will tilt the playing field in their favour, at the expense of consumers, she said.

“It is time that IGA came out from behind this myth they are a small business – they have a substantial slice of the grocery and liquor market in Australia.

“Aldi, a foreign owned entrant to the market, has grown from zero to 300 stores in less than a decade, a clear indication of the demand and the level of competition.

“More regulation, as called for in this report will only damage companies that employ more than 300,000 Australians and support hundreds of local businesses.

"The major chains play a critical role in regional communities where they represent jobs and cheaper prices for local consumers.

“The Australian supermarkets are leading the charge to bring the lowest possible prices to consumers, while still supporting local growers and manufacturers.

"Australian families struggling to cope with cost of living challenges like increasing electricity prices benefit from the price cutting competition that exists between the major supermarket chains.

“To suggest that Coles or Woolworths are deliberately establishing loss making stores to limit local competition is a nonsense. It does not make good business sense.

“This IGA-inspired report suggests that Australian shoppers need the Government to make their decisions for them and tell them, where, when and how they can shop.

"Nothing could be further from the truth,” Osmond said.

When we contacted a representative from ANRA to discuss the impact of the supermarket price wars on Australian workers and families who are out of business due to the duopoly, Food Magazine was told they did not speak about the pricing and operations of the business and we should go back to Woolworths for responses.

Here at Food Magazine, we are always hearing the shocking stories from manufacturers, farmers and suppliers about the impact of the supermarket duopoly’s power, but so few are ever willing to go on the record with their complaints.

The Senate Inquiry struggled to get anyone to speak up, because they were afraid of the consequences, we suffered the impact of the same fear campaign in organising the Food Magazine Industry Leaders Summit and Coles and Woolworths continue to maintain that what they are doing benefits their consumers.

Unfortunately, it is putting more Australians out of work as facilities move offshore and companies go bust.

Food Magazine was also told by a Coles representative that more favourable coverage of the supermarkets would result in more requests for comment being returned, but we are not willing to bow down to any form of bullying.

Do you agree with us that we need a Royal Commission into the supermarket powers? 

Bread prices to increase due to US drought, but who will absorb the cost?

Australia’s largest baker has confirmed that the price of bread will increase due to the US drought.

Goodman Fielder’s managing director Chris Delaney said the increase in grain price as a result of the drought in the Midwest of the United States  and that “the consumer would have to pay for that increase',” meaning higher shelf prices for shoppers.

Now that the US corn harvest is forecast to collapse by 100 million tonnes to 274 million tonnes due to the drought, prices will increase throughout the rest of the manufacturing process.

The price of wheat, often used as a substitute livestock feed grain, has also suffered as a result of the unseasonable weather.

Since May, the price of Australian east coast milling-grade wheat has increased by almost half, from $214 a tonne to $310 a tonne.

Experts predict it could remain around $300 a tonne by the end of the year.

The company has also revealed it regrets its choice to manufacture $1 bread for the Coles private label, as it is already unprofitable.

Like so many other industries, including the dairy, produce and food manufacturing, the bread sector is suffering the impacts of being forced to sell their products at prices less than the cost of production for the sake of supermarket private labels and their war on price.

“Dollar bread is at a loss,” Delaney said.

''This was not a good investment and I wouldn't do it again if I had a choice.”

Countless industry insiders and experts have labelled the current private label environment as unsustainable, as farmers and manufacturers leave their sectors because they can’t break even, let alone make a profit.

While Goodman Fielder says the flow on effects of the grain price increases will flow on to consumers, it remains unclear whether the supermarket giants will actually change the shelf price.

They could absorb the costs within their own businesses, but if past experience is any indication, that would be unlikely and it would be more probable that the bread companies and others impacted by the cost increases would absorb the costs within their already struggling structures as Coles continues to sell bread for $1.

Delaney said clauses surrounding rises and falls such as grains allowed commodity prices to be factored into product pricing, but Coles’ response to questions by Food Magazine about the cost absorptions and private label pricing came in the form of one sentence that would seem somewhat threatening to suppliers.

"Coles is happy to review any supplier requests for cost price increases that can be appropriately validated,” the Coles spokesperson said.

When pushed further for comment the response was “sorry, not appropriate to speculate on outcomes.”

The baking company’s private label contract with Coles is up for renewal in the first half of 2013.

 Goodman's private label contract with Coles will be renewed in the first half of next year.

Can Coles and Woollies change public perception of private label impacts?

Despite apprehension about the impact of supermarket private labels and forecasts showing they will dominate shelves in the next five years, Woolworths has attempted to calm the market by releasing information on its range on its website.

Business information research firm IBISWorld has forecasted that the share of private-label products will account for over 30 per cent of all Australian supermarkets sales by 2017-18 and according to IBISWorld’s General Manager (Australia), Karen Dobie, they have been one of the industry’s fastest growing segments over the past decade.

“In 2007-08, private labels accounted for just 13.5% of total supermarket sales – meaning the segment has grown by more than 85% over the past five years”, Dobie said.

Recent studies found that one in four products purchased in Australian supermarkets are private label, and of those, one in two is imported.

The increase in private label

The debate over private label continues to rage, and the impact of the reduced shelf space afforded other companies has led to countless manufacturers and farmers going out of business.

As both Coles and Woolworths appear to be delivering on plans to double private label products in store by 2020, the availability of anything other than private label becomes far less.

Consumers have little choice but to buy private label, as other brands are replaced by supermarket imitations, and according to IBISWorld data, Australians will spend over $21 billion on private label products in the 2012-13 period.

This is already a huge increase from the $19.7 billion in 2011-12, and an even bigger increase from the comparatively tiny $9.96 billion five years ago.

By 2017-18, Australian spending on private label products is expected to hit $31.8 billion, according to Dobie, which is already a 50 per cent growth from five years ago.

“The recessive economic climate has been a strong driver of private-label growth.

"Households have been reining in spending, paying off debt and increasing savings,” she said.

“This, coupled with an increase in the range of private-label products available, has led many consumers to make the shift to home brands.”

“Branded producers have responded to private-label growth by discounting their products to remain competitive.

“However, the dominance of Coles and Woolworths means that they are likely to give preference to their own brands in terms of spacing and design allocations – placing continued pressure on the big brands.

“This can be detrimental to branded producers as their share of shelf space is eroded by home brand products.

Woolworths attempts to address concerns

To address the competition between supermarket private label products and supplier brands, Woolworths has released an Official Range Profile of brands for its Australian supermarkets.

The supermarket giant said the data will be regularly updated on its website and will allow for a “more informed” discussion on choices between private label and branded rpoducts.

Managing Director of Woolworths Supermarkets, Tjeerd Jegen, said Woolworths wants to  demonstrate how they meet their customers’ needs.

“As part of that commitment, we are releasing a snapshot of data about our range to the market to put our business into a correct perspective,” Jegen said.

“The facts show that in packaged groceries and perishables, Woolworths stocks more than 44,000 lines of which 94 per cent are branded products.

“Just 2,500 are Woolworths Own Brand products,” he said.

Complete dominance

While the supermarket is maintaining that their range is heavy in branded products as a way to alleviate debate on the issue, it does not change the fact that the supermarket duopoly is gaining more control of the market all the time.

The Senate Inquiry set up to investigate the anti-competitive practises of the major supermarkets struggled to get people to speak up, and while many will speak of the record, few will go public with the stories of the power the supermarkets’ wield.

There have been calls for an ‘Australian-made’ aisle in supermarkets, a cap on the percentage of private label products that can be stocked and restrictions on the market share the supermarkets can have.

However, while the awareness about the impact of the price wars, particularly on Australian dairy farmers is becoming more widespread, the supermarkets continue to maintain they aren’t doing anything wrong, but are instead encouraging companies to innovate and looking out for their customers.

We invited representatives from both Coles and Woolworths to attend our Food Magazine Industry Leaders Summit in June, but because there was one discussion topic, out of a total of six, planned on the impact of the supermarket price wars, we were told they had “no interest” in being involved in what they called a “get the supermarkets” agenda.

When Food Magazine reported on Coles’ failure to respond to more than 73 000 consumers who had “liked” a post on Facebook detailing the impact of the reduced price milk, we received a call a Coles representative, who wanted to point out that they did respond, albeit three days late and to the wrong person.

Food Magazine was accused of being biased towards food manufacturers, but since  this representative from Coles does not usually return Food Magazine’s phone calls, we pointed out that does make it difficult to report from both sides.

We tried to come to an agreement that when we called for comment on stories, he would respond, and Food Magazine, in turn, would provide their perspective on all such stories.

However, he would only agree to this arrangement if we started reporting more favourably on Coles, saying he would “closely observe” the news section to see if we were doing so, before he agreed to participate in stories on the supermarket price wars.

Unfortunately for the supermarkets, we can’t be bullied into behaving the way they would like us to and will continue to report the true realities of the supermarket environment for food manufacturers and producers.

Do you think there needs to be limits on market share of Australian supermarkets? Do you buy private label? 

Coles doesn’t respond to 73 000+ consumers concerned about milk price wars

A concerned consumer’s post on Coles’ Facebook page about the impact of its price cuts on farmers has gained more than 73 000 “likes” over three days, but the supermarket giant is yet to respond, despite constant declarations that customers and farmers are its main priorities.

On Friday, Jane Burney posted a heartfelt summary of the supermarket price wars effects on ordinary Australians.

Dear Coles,

Your $1 per litre of milk deal is killing the lifeblood of our dairy industry. The ramifications of it are finally rearing their ugly head. Dairy Farmers has announced it's price for Tier 2 milk at 13 cents per litre. This is not sustainable in an industry where costs of production can be as high as 30 cents per litre. The consumer is paying $1 a litre and the only winner here is the supermarket. It is time for us to go back to the old fashioned way; in which we bought real milk that tastes like milk; no permeate and where our fruit and vegetables were grown in our beautiful country. Stocking garlic from China, Argentina. What is going on? Obviously it is cheaper to buy it from overseas then from our country; grown in God knows what. And for our farmers and the towns they support and encourage capital growth; it is heartbreaking. Your latest ad campaign sprouting that you support Aussie growers in insulting. You are misleading the public in how you support Aussie growers. Not only have you ruined the fresh milk market but you have also lowered the price on your cheese and butter. The only winner here is you. Eventually all the Aussie growers you so called support will be out of business. Dairy farmers who work 7 days a week, 14 hours a day, who have been dairy farming their whole life, whose cows are their whole life will have to stop farming as it is no longer economically viable to continue. Our "fresh"produce will be flown in. The consumer will be stuck buying expensive, overseas produce. What will happen to our economy and our country towns? I urge people to think about what they buy. The more Australian made produce we buy, the more our money stays here and benefits us. Your $1 milk is a nail in an already suffering coffin. I am ashamed to watch you ads and us farmers burn in resentment when we do so.”

Over 4 500 people have commented, supporting Burney’s position about Coles’ decisions, and more than 73 000 have “liked” the post.

But just like its other notable social media fail earlier this year, Coles has failed to respond to the outpouring of support for Aussie farmers and disdain for the supermarket giants actions.

Not the first social media fail for Coles

In March, the supermarket giant copped criticism from consumers, who insisted it stop ripping off farmers and profiting from pokie machines.

"Finish this sentence: In my house it's a crime not to buy…” it wrote, and finish they did.

One responded with “In my house it’s not a crime to buy BREAD AND MILK AT PRICES THAT ALLOW PRIMARY PRODUCERS TO SURVIVE,” while others shared similar concerns about farmers and Australian workers.

The impact of $1 milk

After Coles cut its retail milk price to $1 a litre in January 2010, the flow-on effects of the decision have continued to damage the sector.

“In NSW, my state, I see farmers being asked to sign contracts for three cents a litre than their previous contracts,” Terry Toohey, Australian Dairy Farmers Director said at the Food Magazine Leaders Summit.

“This will have astronomical effects on fund and profit margins.”

"In my case I'll have 40 per cent of my tier 2 of milk [purchased] at 18 cents [per litre]. 

"The cost of producing it is 40 cents [per litre]. 

"So, you start to look and say, I'm only one person, there are 800 dairy farmers in NSW alone."

The current practice is for milk companies to announce what is known as an Anticipated Full Demand (AFD) to Dairy Farmers Milk Cooperative (DFMC), which is bought at a somewhat reasonable price and referred to as Tier 1 milk.

Any milk deemed ‘surplus’ is then paid at a much lower price and referred to as Tier 2 milk.

However, the buyers of the milk produced on Australian farms are deliberately underestimating the amount of milk that each can deliver, meaning they are not obligated to buy a considerable portion of the milk they know a farm will produce at the reasonable price.

There is no transparency at farmer level as to what Tier 2 milk is being sold to other processors for.

"The retail actions are certainly impacting the dairy farmers in a negative way, this combined with the uncertainties and other factors [impacting] dairy or other farming, it's making it unattractive for the next generation, because it's not profitable for my children,” Toohey said.

"If I was old and had children ready to take over the farm, I will tell them blue in the face not to come into agriculture. 

“And that's pretty sad after 107 years on the one farm."

And as farmers leave family farms because they can’t make enough money to survive and Australian food manufacturers continue to go bust because they can’t meet supermarket expectations, Coles recorded a three per cent growth in sales on Friday.

Update: Coles contacted Food Magazine this afternoon to inform us that they did, in fact, respond to the comment posted on Friday afternoon, at 7am this morning.

The supermarket giant did not actually respond to the original comment, but rather one of the many Facebook users who have re-posted the original comment.

They said: Hi Brent, we are committed to paying a fair price for our milk and actually increased the prices we paid to processors before we cut fresh milk prices in store last Australia day. This meant that processors did not have to reduce the price they pay to farmers. Helping Australian families buy more Australian milk is good for the dairy industry. We also have to disagree about importing fresh produce because we only import when products are not available in Australia. We call this our “Australia First” policy and it means that 100 per cent of our fresh meat, all our milk and 96 per cent of our fresh fruit and vegetables are grown right here at home. Why not take a look next time you are in store.”

What do you make of Coles' comments? Do you agree with the original comment posted on Facebook?

 

 

Katter criticises National Food Plan, Coles returns fire

Bob Katter’s criticism of the National Food Plan (NFP) has been slammed by Coles, but many of his suggestions would drastically improve the current food industry if they were implemented.

The government released the discussion paper on the NFP, which examines consumer concerns regarding food safety, land use and foreign ownership, last week for public consultation.

One of the key recommendations of the paper was implementing steps to improve relationship between suppliers and supermarkets, and the Queensland MP has declared his support for the move.

In a statement to media last week that discussed foreign investment in Australia and the supermarket domination, Katter predicted that within three years Australia would be a net importer of food and “unable to feed ourselves”.

His comments are not at all outlandish, considering other industry experts, including union members, food companies and produce growers have all said the same thing in the last year.

If elected, Katter’s Party would create legislation that would impose labels on imported produce with potential health hazard warnings (as chemicals used in foreign farms have often been banned in Australia for decades) reduce the duopoly’s supermarket share to no more than 22 per cent and return arbitrated prices for milk.

Katter says that reducing Coles and Woolworths’ market share would drastically improve the rights of farmers and small business “against the might of a supermarket share concentration, unseen anywhere else in the world”.

“The Americans are screaming blue murder because WalMart and their competitor have now reached 23pc market share,” he said.

“Here we have two supermarkets with 92pc; so if they decide to cut down the amount of money they are going to pay farmers, they can, because there is no competition.

“On top of this, they are bringing in product from overseas, yet it has been revealed that the Chinese are putting formaldehyde into cabbages.

“And we all know that the antibiotic streptomycin is being used on foreign-grown apples to fight fire blight; and that water contaminated with raw sewage is being put in overseas prawn farms.”

Katter called on all Australian farmers to appeal to their local MP’s to vote for the measures his party is putting forward.

“It’s fighting time,” he said.

“This country will no longer accept a pell-mell rush into not being able to feed itself.

“And this country will not accept a continuation where two giant supermarket chains are able to cut the price to the supplier and increase the price to the consumer, because there is no free market where there is a duopoly.”

Coles Corporate Affairs general manager Rob Hadler said Katter's criticism of the NFP should be ignored, saying it is “xenophobic fearmongering, old-fashioned jingoism, protectionism and false claims about our national food situation”.

While he argued that  Australia has been a net food exporter for well over 100 years, he admitted that ensuring we maintain that position for coming decades would only happen  “if we get the right policy settings in place”.

“Our strong belief is that a strong and competitive domestic food production system is required to support export growth in the longer term,” he said.

“Coles has an ‘Australian first’ sourcing policy that gives preference to Australian grown and made products where they are available.”

But as food manufacturers, producers and farmers will tell you (off the record), while the supermarkets pledge to source food locally, the prices they pay are not sustainable for the future, although Hadler denies this.

“Coles has funded lower prices from being more efficient, not by squeezing farmers and food manufacturers,” he said.

Katter also slammed the increase in foreign investment, saying it is tragic that the government will sit down and talk with Chinese interests but won’t do the same with Australian farmers.

“It is a great tragedy indeed that we have to sell our own country out to get any investment in food production.

“The average Australian may well shake their head – we’ll sell our country off to the Chinese but not develop it ourselves.”