mmg.com.au

A decision by retailer Coles to slash fruit and vegetable prices has growers worried that a price war will start between the two dominant chains, resulting in lower prices for producers.

Coles began its campaign last Tuesday by slashing fruit prices including apple varieties grown in the Goulburn Valley.

Woolworths followed with its own price cuts.

Many growers are worried funding for the competition will come out of their margins, rather than the supermarkets.

Shepparton East grower Geoff Fowler said he was worried about the impact because growers were not price setters but price takers, and severe cut pricing could set a new low benchmark for fruit prices.

He said he was still waiting for some payments for fruit from last season, and had to borrow to fund this year’s crop.

‘‘About 70 per cent of our fruit goes to the packers on consignment. So there’s no set price. We get what’s left over,’’ he said.

A fifth-generation grower, he worries the cumulative effect will be felt by not just the fruit growers, but by the Shepparton community as well.

Coles spokesman Jon Church said the retailer had met with growers and worked out prices which gave growers a fair return and were attractive to customers.

‘‘It’s been planned with growers and it has been agreed with them.’’

He said there had already been a significant increase in volumes sold as a result of the price cuts.

Mr Church would not give a definitive answer when asked if the prices for growers were lower or from whose margin the discounts were coming.

Country News has spoken to some Coles suppliers who say they were never asked about new prices and never entered into negotiations.

Mr Church insisted the outcomes would be good for growers and customers.

As well as savings for customers, Coles’ new freshness campaign is also good news for Australian growers who have produced a bumper crop thanks to ideal growing conditions around the country. By offering customers low prices on fruit and vegetables, Coles expects to increase sales, providing a more certain market for Australian growers who, with such an abundance of product, may otherwise end up having to leave some crops in the fields.

The VFF has called on big supermarket chains to commit to an ethical sourcing policy when dealing with Australian fresh food producers.

‘‘While the supermarkets’ latest round of discounting may be helping fruit and vegetable growers deal with an oversupply of produce, they must guarantee that growers will receive a fair return on their investment,’’ VFF president Andrew Broad said.

‘‘There remains a large gap between farm-gate prices paid by supermarkets and shelf prices paid by consumers.

‘‘Growers will have no problem with the latest cut-price strategy as long as they are being rewarded for their investment.

‘‘Coles claims that it’s able to get most fresh produce from gate to plate in 24 hours. If the supply chain is so efficient, why is there such a high mark-up on some fresh items?’’

Apple and Pear Australia staff met with Coles’s senior business manager of produce Craig Taylor and corporate affairs manager Chris Mara to understand the rationale behind the campaign and to judge the impact it would have on the apple and pear industry.

Coles told the delegation the super specials created a big increase in sales of those fruits and vegetables and it usually only offered these super specials for oversupplied seasonal stock or where there was abundant stock of product.

With apples and pears, Coles said it would not have two apples on super special at any one time.

APAL managing director Jon Durham said while he understood the background to the campaign, he was concerned that if apples and pears were always included in the super specials, the cost of the low prices could be borne by the growers.

Coles said the campaign was usually only one to two weeks long, so customers did not come to expect the low prices long-term.