Where does the food sold in Australian supermarkets really come from?

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One in every four grocery items now sold in Australian supermarkets is private label and of those, about one in two is imported.

The Age has conducted an investigation into the state of the supermarket sector, and the results would not surprise anyone in the Australian food manufacturing sector.

It found the rate of imported food products is increasing at a rapid pace, as the only way for the companies to provide their ridiculously low prices is to buy food produced in countries by cheap labour.

South Africa and Thailand, two countries notorious for lacking in workers’ rights and having extremely low wages, are two of the markets commonly used by the cheap food retailers in Australia.

Researchers from the Australian National University embarked on a mission to follow the supply chain of many private-label products sold in Australia, which found them in South African fruit processing factories and canned pineapple facilities in Thailand.

"One of the canneries made private-label products for over 100 supermarkets," researcher Libby Hattersley, who inspected the South African businesses, told The Age.

"They just slap the retailers' label on it and send it out to them."

Differing food safety laws a risk for consumers

While the ethical issues involved with sourcing food from such countries are becoming increasingly important to consumers, there are various other issues involved with these systems.

“[No Australian food manufacturers] can survive in this environment, most places I’m going, they’re even competing with their own plants in other countries, if the Malaysian or Chinese plant is going better, they have to compete,” Jennifer Dowell, National Secretary of the Food and Confectionary division of the Australian Manufacturers Workers Union (AMWU) told Food Magazine earlier this year.

“The problem with that is that people aren’t comparing like with like.

“We produce food to a very high level and what is being imported from overseas needs to be the same quality.

“There needs to be more regulation and better testing for what comes into our country.

“If food is imported from a high risk site, like China, that will undergo testing, but not if it’s from New Zealand.

“The way the import laws work in New Zealand mean that they can import a product from China, put it in a bag in New Zealand and ship it to Australia as a ‘product of New Zealand.’

“If we try to export to other countries we face huge barriers, but we have removed all the barriers for others getting food into our country.”

The issues with the Senate Inquiry

Dowell was heavily involved in the Senate Inquiry into the supermarket duopoly in Australia, which was set up to investigate the anti-competitive practices and bullying behaviour of the major supermarkets, which are pushing Australian companies out of business.

But ironically, or tragically, the proof was in the imported pudding, as the Inquiry struggled to convince manufacturers to speak up, as they were terrified of the repercussions, including being relegated to a lower shelf, incurring more fees or removed from the shelf altogether.

Australian food producer Dick Smith said the blame lands at the feet of supermarkets ALDI and Costco, who rely entirely on imported goods, when he fronted the Inquiry earlier this month.

He believes the other supermarkets embarked on a game of catch-up, which has led to the current situation.

Australian made: are people really willing to pay more?

In April, Smith joined a number of local food and beverage producers, including Glen Cooper, chairman of Australia’s largest beer brewer, in  calling for a dedicated “Australian made” aisle in supermarkets to make it easier for consumers to choose locally made products and keep local businesses afloat.

Cooper believes laws which force supermarkets to set aside a minimum quota of floor space for locally-made food would be one way to slow the flood of cheap imports and prevent some manufacturers from tricking consumers into buying products they think are made in Australia, but are in fact made primarily from imported products.

"It's not realistic for busy shoppers to read every label to see its country of origin before you put it in your trolley," Cooper told Channel 7's Out Of The Blue program.

"So I think they [supermarkets] should be forced to have a certain amount of locally grown content and that it should appear in a clearly defined area designated for Australian-made products only.

While most Australians say they would prefer to buy Australian made, even if it comes at a higher price – indeed, at last check, a poll on The Age’s website showed 80 per cent said they would pay more for locally produced foods – the realities of the current economic climate are seeing more shoppers buying primarily on cost.

Coles and Woolworths maintain that they endeavour to source the majority of their food products from Australia, but one in two products in the Woolworths Select brand is imported.

It’s premium brand, Macro, has 85 per cent Australian products.

Coles will not release a figure on the percentage of its private label products that are sources locally, but The Age reports a source with connections to the business said it imports about one third of its own brand products.

The supermarkets like to toot their own horn when they do make a local supply deal, and blame it on a lack of Australian interest when they source from foreign markets.

"You'd be surprised how many times we get no one responding in Australia to our invitations to supply," Woolworths head of own brand Gordon Duncan told The Age.

It is notoriously difficult to get any Australian food manufacturers to speak on the record about the struggles, as they fear punishment from Coles and Woolworths, but Food Magazine is aware of numerous companies who are unable to supply to them due to their unrealistic demands.

Indeed, earlier this month Transport Worker Union (TWU) accused the major supermarkets of contributing to road deaths as they place unrealistic expectations on suppliers and drivers.

Coles recent deal with Simplot, the only remaining Australian-based frozen food processor,  to supply its house-brand vegetables, will apparently be so good for the industry they won’t even be able to grow the amount needed to supply both major supermarkets, according to Duncan.

The peak representative body, AusVeg, has labelled this “nonsense.”

Considering that in the last two years, fruit and vegetable exports have declined $200 million to $497 million, Coles’ comments are very optimistic.

Earlier this month the second Queensland tomato processor to go into administration this year left 40 employees out of work.

Bundaberg tomato farm, Basacar Produce went into voluntary administration, following in the footsteps of the nearby SP Exports, which collapsed in February, blaming the high Australian dollar and the supermarket price wars.

The SP Exports farm was the biggest in Australia before it collapsed, leaving hundreds of people unemployed.

While the Simplot-Coles deal is being touted as positive for the produce industry, it could mark the beginning of issues for the frozen vegetable industry that have plagued fresh produce suppliers for some time.

With the dairy industry still reeling, Coles slashed the price of produce in half in February and AusVeg spokesperson Simon Coburn told Food Magazine it “had the making” of the milk price wars.

“Long term this could deliver lots of damage to the industry,” he told Food Magazine.

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

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

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

How do you feel about buying imported versus local products? Do you think we need a Royal Commission into the state of the supermarket duopoly?