AFGC finalises draft legislation calling for Supermarket Ombudsman

The Australian Food and Grocery Council (AFGC) has announced it is finalising the draft submission for a Supermarket Ombudsman to be a key part of the next Federal Budget.

The peak industry body has been urging the government to instate an Ombudsman and establish a Trading Code of Conduct, to stamp out the anti-competitive, behaviours of the major supermarkets, which are pushing Australian food manufacturers and small businesses out of business.

The AFGC announced it would be starting on its draft legislation to present to the government back in January and has enlisted the help of international law firm Baker and McKenzie in its bid.

The AFGC wants the Supermarket Ombudsman to ensure Coles and Woolworths are fair and transparent in their pricing and do not push more Australian companies and industries out of business, as they have done with the dairy and fresh produce industries, among others.

The AFGC also announced last month that it would be extending its representative reach to also include small to medium enterprises.

It will be consulting all stakeholders on the draft legislation this week, before the matter is referred to the government for approval.

The new breed of food consumer

Earlier this year, peak farming bodies voiced their alarm that a shocking 75 per cent of year six students believe cotton socks are an animal product and others think yoghurt grows on trees.

Just under half of the 300 surveyed did not know bananas, bread and cheese came from farms, leading the Australia Council of Educational Research, which conducted the study, to express its concern about the findings, which prove there is a huge disconnect between farmers and consumers.

Other industry groups are calling for more education about modern farming practices, to provide transparency and build trust of Australian products.

But a new report has identified a new breed of Australian food consumer: the urban ‘food citizen,’ who achieves social superiority by arming themselves with heightened knowledge about ethically and sustainably produced food, as Rachel Sullivan writes for CSIRO Publishing.

As Australia’s two major supermarket chains conduct a noisy price war, a quiet revolution has been taking place.

The past few years have seen the rise of food citizens: urban consumers who actively seek to secure ethically and sustainably produced food and connect with how food is grown and made.

Their interest has led to a rapid proliferation in alternative food sourcing, including farmers’ markets, food co-ops, community gardens and urban orchards, herd shares, neighbourhood cooperatives, fresh produce box schemes, farm gate trails, and informal home-grown produce trading within communities (i.e. food swaps).

The grass roots movement is starting to have an economic impact, with a recent report from the Australian Egg Corporation estimating that backyard chickens now account for nearly 12 per cent of the country’s total annual egg production.

‘We often don’t know the story behind the food we consume, but when you talk to the farmer you have a different perspective on whether something is healthy or not,’ says Nick Ray the founder of Local Harvest, an online hub that helps consumers find local farmers’ markets, community gardens, food swaps, organic and free range producers and community box systems.

‘A sustainable food system relies on us localising at least part of it, and will help make it more resilient to price hikes and potential supply issues associated with fossil fuel and fertiliser shortages.’

Kirsten Larsen from the Victorian Eco-Innovation Lab at the University of Melbourne agrees.

‘As the Queensland floods demonstrated, our current [centralised] food system is vulnerable to disruption, whether that relates to climatic extremes or other interruptions to supply,’ she says.

‘When the central wholesale market in Brisbane went underwater, significant parts of Brisbane’s supply chains were out of action.”

Organisations like Food Connect [see below] were able to quickly respond and adapt to the situation, partially because the diverse base of smaller suppliers were less affected overall by the flooding, but also because its rich social network enabled people to connect and organise food movements through (and to) flooded and cut-off areas.

‘It’s an example of how a more distributed network for food sourcing increases their strength, resilience, flexibility – and therefore security.

Not only do they connect people with farmers, they also increase connections to bigger system change.

To read the full article, click here.

Steggles defends “free to roam” claims still on products

Steggles chickens are still being advertised as “free to roam” despite the consumer watchdog labelling such claims by the company as misleading and deceptive last year.

In September the Australian Competition and Consumer Commission (ACCC) announced it was taking a number of chicken suppliers to the Federal Court, claiming they wrongly advertised chickens as free range.

According to the ACCC, national Steggles suppliers Baiada Poultry and Barttner Enterprises, La Iconica suppliers, Turi Foods and the Australian Chicken Meat Federation were misleading or deceptive in the promotion and supply of chicken products.

The ACCC said the impression that Steggles chickens are raised in barns with plenty of room to roam freely used in the advertisement and promotion greatly influence consumers, and in reality, most of the animals have a space no larger than an A4 sheet of paper.

Despite La Ionica’s decision to stop using the “free to roam” claim and pay the $100 000 penalty as a result of the court case, Steggles and Baiada are refusing to bow to pressure and are instead arguing against the ACCC’s claims.

John Camilleri, the managing director of Steggles’ owner Baiada Poultry yesterday told the Federal Court in Melbourne that he ordered the slogan ”free to roam in large barns” be removed from chicken packaging in August last year.

He said the differing rates at which products are stored and sold makes it impossible to eradicate any reference to “free to roam” claims overnight, and his objective is to have “hardly any” chicken with the slogan for sale by the end of April this year.

”What we don’t have control of is any stock that’s in obscure locations,” he said.

”Some of these products have a shelf life of 18 months.”

He said Baiada limits the density of chickens in its sheds to 36 kilograms per square metre, although the limit set by national poultry rearing regulations is 40 kilograms per square metre.

During the case, Camilleri vocalised what many in the industry already know about the storage and distribution protocol of the major supermarkets.

The ACCC’s counsel, Colin Golvan, SC, asked him to explain why a frozen chicken bought by a representative of the regulator last month in the Melbourne CBS still had “free to roam” on the packaging.

Camilleri explained that the product had old packaging, because ”God knows how long Coles have been storing that or where it’s been stored.”

The trial is continuing.

Food producers slash more than 100 jobs in Victoria

It is not a good time to be a food manufacturing worker in Victoria at the moment, with Mars and Murray Goulburn set to slash more than 100 employees from its workforce between them.

Murray Goulburn’s Rochester milk drying plant plant, north of Bendigo, will cut 64 jobs, while Mars will be getting rid of 38.

The state Opposition says it is time to recognise the real situation in the sector and start improving it.

“This government has to recognise this problem is a real one, affecting real people’s lives,” he said.
“They need to take responsibility and reduce government taxes and charges for businesses.”
Every month there seems to be more jobs going from the sector, as the high Australian dollar makes it too expensive for companies to stay and the supermarket price wars puts those that remain at risk of collapse.

The Heinz factory in Girgarre, in Victoria, was officially closed in January, despite workers attempts to save the tomato processing facility.

Girgarre is only a small community so the job losses have had a massive impact, as will the Murray Goulburn’s decision, with Rochester home to less than 2000 people.

The job cuts, which will reduce the 144-strong workforce to 80, will take effect from 30 April.

Gary Helou, Murray Goulburn managing director, said the job cuts were necessary.

“It is difficult to lose good people who have worked hard for the company,” he said.

“We will be doing all we can to support affected staff over the coming months, including arranging counselling, financial advice and job transitioning services,” he said.

Mars has not released a statement on its job cuts at this stage.

Coles told to pull its socks up in Twitter experiment gone wrong

In a spectacular social media failure on Coles’ part, the supermarket giant has copped criticism from consumers, who insist it stops ripping off farmers and profiting from pokie machines.

Coles sent out a seemingly innocent sentence for its Twitter followers to finish yesterday, although in hindsight it must have realised it was a recipe for disaster.

“"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”

“…from our local IGA & farmers market as we support our farmers,” said another, and “fruit & veg from a place that pays their farmers fair prices & sells seasonal produce not stored in a freezer or artificially ripened,” said one disgruntled shopper.

While the issues surrounding Coles’ predatory pricing and unfair treatment of farmers and suppliers was the main issue Twitter users shot back at the supermarket giant, it was not the only thing on people’s minds.

“In my house it’s a crime not to buy… Food from markets while Coles exploits mental illness via pokies,” said one.

“In my house it’s a crime not to buy media influence with the billions we made from mining!” another user said.

Even the jingles and famous faces used by Coles to market its products was not spared.

“It’s a social media crime to….. Hire curtis stone,” one Twitter user responded, while another replied “ In my house it’s a crime not to buy…the rights to good songs so I can turn them into steaming turd piles.”

All in all, the social experiment was summed up accurately by another Twitter user, who said “@coles "Finish this sentence" was a social media #fail. You suck.”

You can view more of the responses to Coles’ question on Twitter.
 

Companies start dobbing in supermarkets

It’s the issue everyone knows about, but nobody is willing to discuss publically – the major supermarkets engaging in anti-competitive, bullying behaviour and putting Aussie companies and farmers out of business.

Late last month the Australian Competition and Consumer Commission (ACCC) called on companies to dob in the dodgy behaviour of Coles and Woolworths and some have already started talking.

”If people have concerns, come to us with the evidence,” ACCC chairman Rod Sims said at the time.

“It is all very well for some of the industry representatives and others to talk about behaviour that is going on there, but we need evidence.”

Anonymous complaints

But the names of the companies are not known, as the ACCC promised confidentiality for companies and individuals reporting on the actions of the supermarket giants.

This situation is a problem it itself, as it is well known within the industry, but rarely said on the record, that criticising the major supermarkets is suicide for manufacturers and farmers.

Australian Manufacturing Workers Union (AMWU) National Secretary of the Food and Grocery division, Jennifer Dowell, told Food Magazine companies are to afraid of the repercussions of speaking out publically against the major supermarkets.

“If a company like Nestle came out and said ‘we’re going to buy a stake in Coles, and dominate the shelves with our products,’ there would be uproar, it would be a huge scandal, but when the supermarkets do it, it’s a non-issue,” she said.

“That just doesn’t make sense..

“If I control a market I can just put all my own products in it, and as I have said at the inquiry, if I am mother pushing a trolley through Woollies with three screaming kids, and all they have is their own brand, I am not going to pack my kids up into the car and drive around to find non-existent corner stores that stock the product I actually want.

“They try to say they’re allowing consumers to decide, but they are making all the decisions for us, and it’s time we opened our eyes and saw that.”

On the basis of anonymity, the consumer watchdog has received complaints about “unconscionable conduct” by the supermarkets.

Sims told The Sydney Morning Herald yesterday there have been ”approaches from suppliers relating to allegations about the behaviour of the supermarkets”.

Some big names were amongst those reporting problems with the supermarket’s actions, Sims said.

Unreasonable demands on suppliers

One of the major complaints of the companies is that Coles and Woolworths request a higher output of a manufacturers’ product to meet demand, which increases costs for the company.

But instead of sticking to the price agreed on when the deal is initially made, the supermarket then requests that the supplier lowers the price.

If they refuse, they often find their product missing from supermarket shelves, and an excess of stock that they cannot store or sell in time.

And as the number of branded products decreases, the private label products offered by supermarkets continue to dominate shelves.

Last year Woolworths announced plans to double the number of private label brands in the next five years, while the Australian Food and Grocery Council commissioned a report showing that if the current environment continues, 130 000 workers in the food and grocery sector will be out of a job by 2020.

The AFGC, and a number of other companies and representative bodies, wants a Supermarket Ombudsman appointed to oversee the behaviour of the supermarkets.

Coca-cola’s declining profits: supermarket wars blamed

Coca-Cole Amatil (CCL) has released its full-year results which show that even brands as big as the famous fizzy manufacture are not immune to the supermarket price wars.

CCL has not come out swinging as a result of the profit loss, which in itself is a telling tale.

Manufacturers are too scared of the power Coles and Woolworths wield in the sector, as the punishment for doing so can result in the company going out of business.

Last year CCL was excluded from Woolworths catalogues, in a prime example of the punishments the supermarket giants deal out to companies that get on the wrong side.

The Australian Competition and Consumer Commission (ACCC) is calling on people to dob in the dodgy practises of the big two, but Australian Manufacturing Workers Union (AMWU) National Secretary of Food and Grocery division, Jennifer Dowell, told Food Magazine companies will not speak up with the environment in its current state.

CCl chief executive, Terry Davis, wouldn’t officially say the name of the problematic buyer that impacted sales on a conference call, the Sydney Morning Herald reports.

”Whenever you have a scenario where, in this country, all consumer goods manufacturers have to deal with a very concentrated retail environment, you will go through periods of trading where you may not necessarily agree with their point of view, and they may not necessarily agree with our point of view” he said.

But experts are singing a different tune, saying the profits dip is clearly the result of the impact of the major supermarkets.

”We estimate CCL’s volumes at Woolworths fell about 6 per cent over the year, and based on the recent reductions in front of supermarket shelf space, we believe this customer will continue to impact CCL’s volumes through most of 2012,” Commonwealth Bank’s retail analyst team lead by Andrew McLennan said.

 

Australian food environment bears striking resemblance to the US

Many of us down here in what was always considered the luckiest country, have often shared our opinions on the United States and its relationship with food.

We saw the figures on their obesity rates and thought they were way to high. We criticised the amount of frozen and processed foods they consume, and their availability in every supermarket.

We slammed the quality of their fresh produce, saying it didn’t even come close to the good quality stuff we have here.

But, it seems our current state of affairs within the food sector in Australia has some pretty stark similarities to that in the US, as they too struggle with the impact of retail giants.

Farmers and pickers are paid a pittance for their labour, which in turn, allows the supermarkets to make huge profits.

Sound familiar? That’s because it is happening here too.

Produce growers and dairy farmers say they cannot maintain any kind of livelihood because the major supermarkets are using their power to force them to sell their products at unreasonable prices.

Food manufacturers say they cannot afford to keep their operations going because Coles and Woolworths are replacing their products with private label imitations.

And the Australian Food and Grocery Council (AFGC) commissioned a report which found 130 000 workers in the sector will be out of work by 2020 if the current environment continues.

Australian Manufacturing Workers Union National Secretary of the Food and Confectionary division, Jennifer Dowell told Food Magazine it will be even sooner than that.

On the US situation, China Millman reviews a book by Tracie McMillan for the Pittsburgh Post-Gazette and discusses why food is such a got topic these days.

From a certain perspective, Americans have never been so obsessed with food.

Turn on the TV or pick up a magazine and you can feast on recipes, restaurant reviews, profiles of the latest celebrity chef and hottest new ingredient.

One could easily imagine that it’s never been easier or more fun to eat well in our nation.

But what if the only large grocery store in your town offers rock-bottom prices for food that comes in a box, while produce is expensive and often of poor quality?

What if you make less than $200 a week, and you and a dozen other adults share a kitchen that has just one small refrigerator and stove?

What if you work around food all day but come home so tired that the idea of cooking seems completely beyond your reach?

In "The American Way of Eating" Tracie McMillan recounts months she spent working in the grape and garlic fields of California, the grocery and produce departments of two Michigan Walmart stores, and the kitchen of an Applebee’s in New York City.

Ms. McMillan makes a convincing case that America’s food system is a mess. But this is no harangue. Her book is a pleasure to read, illuminating complex arguments and statistics with vivid details and engaging stories.

As a work of experiential journalism, the book has much in common with Barbara Ehrenreich’s 2001 "Nickel and Dimed: On (Not) Getting By in America."

Like Ms. Ehrenreich, Ms. McMillan immerses herself in her new jobs, attempting to live off her wages plus an appropriate start-up fund, and she supplements her personal experiences with interviews and detailed statistics. Also like Ms. Ehrenreich, she quickly discovers that her college education and experience as a journalist don’t necessarily equip her with the skills to work these supposedly low-skilled jobs.

Each experience gave her a different perspective into the American food system and a chance to answer some of the fundamental questions about how our food gets from the field to the dinner plate.
The book is full of harsh realities.

As an agricultural worker, Ms. McMillan often feels she receives favoritism because of her gender, her age and the color of her skin, but that doesn’t keep her from being illegally underpaid, along with the rest of her co-workers, her paychecks manipulated to reflect a few hours of minimum wage work instead of full days of work paid by the quantity picked.

At Walmart, she discovers that the famous institutional efficiency does not extend to the produce department, where she finds herself throwing out "200 pounds of asparagus, the base of every bunch coated in thick moldy layers.

" The produce on the aisles isn’t always better.

"One shopping trip turns up "Kirby cucumbers … gone soft," cilantro with "blackened greens," and "mushrooms … slimed with age."

But at least it’s cheap, right?

Not necessarily. Ms. McMillan learns that while Walmart beats competitors handily when it comes to shelf-stable goods, their produce prices aren’t necessarily any cheaper than smaller, independent stores.

Despite all this, Americans already spend one in four of their produce dollars at Walmart, and as the company lobbies to expand into "underserved" neighborhoods, it’s likely that proportion will grow larger.

This combination of the factual and the personal breathes life into dry economic terms such as "changes in market share" and "supply chain efficiencies," providing a sense of what they mean in the lives of real people.

Applebee’s doesn’t compare with Walmart in size, but it is the largest sit-down restaurant chain in the world, and like the grocery behemoth, it relies on innovations in the supply chain for profit and growth.

Working as an expediter, the person who makes sure that each plate goes out of the kitchen to the dining room correctly, Ms. McMillan discovers that most of the food the restaurant serves, from sauces and soups to proteins and side dishes, comes to the restaurant already cooked. It just needs to be reheated, garnished and served.

Fruits and vegetables can be hard to come by, not because customers wouldn’t buy them, but because they are difficult to sell as profitably.

But her time at Applebee’s is also spent thinking about what cooking means in America. Ms. McMillan knows she could make healthier, better-tasting food for a fraction of the cost of an Applebee’s meal, but as days pass, the long hours on her feet and the offer of a subsidized meal at work slowly sap her desire to cook.

How much harder is it, she wonders, for people who don’t feel comfortable in the kitchen? Ms. McMillan cites studies that have shown it takes families about the same amount of time to make dinner from a boxed mix or from scratch, and cooking them from scratch is much cheaper.

The people using the box are likely substituting money for skill — They use the box because they aren’t sure they know how to make dinner without it.

In the face of all these obstacles, the book, and the author, remain surprisingly optimistic. Everywhere Ms. McMillan traveled, she met people who may be struggling to get by on minimum-wage jobs, but they still make an effort to eat as well as they can, and they enjoy and appreciate fresh food.

The book has big villains, but it also has plenty of small heroes, like Patti, a cashier at Kmart, who calls oranges a "splurge" and says "it’s too expensive to eat fruits and vegetables much."

That may sound like someone who doesn’t care about eating healthfully, but Patti drives 13 miles to take advantage of a farmer’s market program for food stamp recipients that gives her an extra $20 to spend on produce.

There, she buys "honeycrisp apples, potatoes still smelling of earth, paper-skinned onions and Brussels sprouts still on the stalk."

Near the end of the book, on a cross-country drive, Ms. McMillan finds herself eating lunch at a McDonald’s, the only option "in sight of the gas station that lured me off the highway."

As she ate her burger, fries and soda, she thought about all the similar meals she’d eaten at Applebee’s and considers some of the ways she might have managed to eat a healthier diet.

For a moment, from the outside, it seems so easy: Join a co-op, cook in the morning, split up cooking duties with a roommate.

But as a journalist, she takes a step back and looks at the bigger picture.

"The reason these things [procuring fresh food and having time to cook it] seem hard is because they are, at least for people like myself and my co-workers — not just at Applebee’s, but at Walmart, and in the fields, and I suspect even for folks more affluent than that." She writes:
"I haven’t landed here with my diet soda and mysterious beef patty because I, personally, haven’t got the right priorities.

I’ve landed here because, for a very long time, America has ignored a priority that should be one of its biggest: Making sure its people can eat well, not just through the agriculture it practices but through the wages it pays, the work and education it provides, and the rules it keeps."

The next time Alice Waters suggests poor people should buy local vegetables instead of sneakers — or, in other words, that poor people just don’t have the right priorities — I hope someone hands her a copy of "The American Way of Eating."

It’s not rocket science. If people learned how to cook in public schools, programs made fruits and vegetables cheaper and high-quality fresh food was more readily available, people would eat healthier and be healthier.

At some point food, as basic a necessity as the air we breathe and the water we drink, became something else — a personal rather than a collective responsibility.

Ms. McMillan believes we can change that, and that if we did, we could live in an America not so different from our own, but one where eating good, fresh, healthful food would truly be the American way of eating.

This article originally appeared at the Pittsburgh Post-Gazette.

Another day, another victim of the supermarket duopoly: Anzac maker collapses

It’s a sad day for a traditional Australian treats, and for Australian jobs, with an Anzac biscuit manufacturer appointing administrators and putting 170 jobs at stake.

Lawler Draper Dillon were yesterday appointed as the administrators of the Unibic company, after attempts by owners, the Quinn family, failed to secure a new investor.

Creditors recently began legal action on the company, after it failed to pay labour hire and ingredients bills.

Labour hire company Labourpower Recruitment asked in the Federal Court for Unibic to be wound up.

The 170 staff at the northern Melbourbe Unibic factory are being informed of the company’s collapse today.

Unibic is the latest in the line of Australian food and beverage companies that are failing as a result of the supermarket duopoly and the predatory practices that come along with it.

Australia’s largest milk processor, Lion, recorded a loss this year, a direct result of the milk price wars, when Coles slashed the price of its private label milk to $1 a litre a year ago and Woolworths quickly followed suit.

Despite a Senate Inquiry and an investigation by consumer watchdog the Australian Competition and Consumer Commission (ACCC), Coles was cleared of any wrongdoing in the case.

Australian Dairy Farmers Association President Chris Griffin told Food Magazine this morning the industry will continue to suffer as a result of the milk prices.

“We know there’s been at least 30 leave the industry in Queensland alone, and the majority are sighting the uncertainty of milk prices as the reason.”

There is yet to be a similar inquiry into Coles’ decision to halve the price of fresh produce, but Simon Coburn from AusVeg told Food Magazine the continuous predatory pricing will leave Australia without a food industry to fall back on.

“The industry will die off, probably not slowly, and imports will start flooding the market,” he said.

“So we face more imports and lose our identity and in the end the consumer will pay the same if not higher and we won’t have an Australian industry to fall back on.”

Late last month the ACCC called on companies and individuals to dob in the dodgy practices of the major supermarkets, who are accused of slashing prices and letting companies and farmers absorb the costs, and removing products from shelves in favour of their own private label versions.
 

But Australian Manufacturing Workers Union (AMWU) National Secretary of the Food and Confectionary division, told Food Magazine companies are too scared to speak up about what is happening, because Coles and Woolworths hold too much power.

“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,” she said

“[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.

“We think their power should be beefed up and we think there needs to be more oversight.

“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.

Only two weeks ago Unibic’s chief executive Michael Quinn was discussing his despair with the supermarket duopoly, telling BusinessDay that the two major supermarkets had made it impossible to survive.

His comments echo those of food manufacturer HJ Heinz, who last year labelled the market an “inhospitable environment” and blamed it on the company having to relocate some operations overseas.

Unibic has an agreement with the Returned Services League to produce a wide range of biscuits, including the Anzac biscuit, which found its way into Australian’s lives throughout times of conflict, when soldiers would eat the biscuits on the battlefront because they lasted a lot longer than other types.