Food Farmers Commissioner to help tackle rising supermarket prices
The Opaque Web of Australia's Fresh Produce Supply Chain: Why Mediators Aren't the Solution
Australia's fresh produce supply chain is a complex and opaque web that leaves growers struggling to achieve consistent, sustainable and profitable farm gate prices. The recent proposal for a Food Farmers Commissioner in Queensland https://www.abc.net.au/news/2024-08-13/new-commissioner-to-mediate-price-disputes-supermarkets-qld/104218574, intended to mediate between growers and major supermarkets, highlights the limitations of relying on mediation as a solution to the deeper issues plaguing our agricultural sector. While well-intentioned, mediation fails to address the systemic problems that growers face daily.
The Limitations of Mediation
Mediators like the proposed Food Farmers Commissioner are tasked with facilitating discussions between growers and supermarkets. However, they lack the power to enforce meaningful change. Growers have expressed concerns that these mediators cannot hold supermarkets accountable for their practices or ensure fair pricing. Instead, they often serve as a temporary fix, allowing the underlying power imbalances and exploitative behaviors to persist.
The Curse of On-Consignment Trading
One of the most pressing issues in our fresh produce industry is the continued reliance on consignment trading practices at wholesale markets. These profit-driven, shareholder-owned entities operate independently, refusing to collaborate or share information freely with our Australian growers on which their wholesale market is built on. They bear no financial responsibility for the produce they sell, leaving growers to gamble with each delivery, hoping for a profitable return.
The same consignment-based wholesale markets supply our independent and major retailers with produce at any price they deem necessary to make a sale, regardless of the impact on growers. After taking their hefty, unpublished, and unverifiable profit cut, these wholesalers pay whatever remains to the growers, whether it's a profitable amount or not. This approach has enabled wholesalers to build highly profitable businesses at the expense of our growers.
Moreover, these wholesale markets, trading with major retailers, have no qualms about competing directly with growers who supply supermarkets. While growers strive to secure fair, sustainable, and profitable prices, wholesalers can undercut them because they can simply pay growers less for the produce they supply, without any repercussions. Major supermarket buyers take advantage of this by using the lowest prices offered by wholesalers as a benchmark for what they will pay growers directly, often driving prices down to unsustainable levels for those who supply them.
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The Absence of Transparency
Our Australian fresh produce industry operates in a complete vacuum of information. As a nation we have no idea where, when, or how much produce is being grown, let alone what is being sold, to whom, and at what price. This lack of transparency extends throughout the supply chain, with each player acting on a whim, akin to betting on a number at the casino and hoping for the best. The absence of real-time data on production, market conditions, pricing, and demand prevents our growers from making informed decisions about what to produce and when to sell.
The Disconnect Between Stakeholders
The abundance of industry representatives at state, territory and federal levels has done little to improve the situation. These stakeholders often work in silos, pursuing their own agendas without any real collaboration or shared vision for the industry. This disconnect has led to a patchwork of initiatives and policies that fail to address the root causes of the problems faced by our growers.
The Need for Systemic Change
To break this cycle of opacity and inefficiency, our Australian fresh produce industry requires a complete overhaul. Growers need access to real-time data and transparency in the supply chain to empower them to negotiate better terms with retailers. Wholesale markets must transition away from on-consignment trading and embrace sustainable pricing models that prioritize the needs of our growers. Moreover, industry representatives at all levels must come together to develop a cohesive, long-term national strategy for our fresh produce industry. This requires a willingness to put aside individual agendas and work towards a shared vision of a thriving, sustainable, and transparent supply chain that supports the success of our Australian growers.
Conclusion
The opaque and non-transparent nature of Australia's fresh produce supply chain is a systemic issue that requires a comprehensive solution. Relying on mediators like the Food Farmers Commissioner will not resolve the underlying problems. Instead, the industry must address the issues of on-consignment trading, information asymmetry and stakeholder disconnection to create a more equitable and sustainable future for our growers and consumers alike. It's time for our Australian fresh produce industry to step out of the shadows and embrace the light of transparency, collaboration and innovation.
Agronomy @ Metagen. Soil and Plant Health. Bio-prospecting Soil Biology Diagnostics.
3 个月Have seen onions on sale for $3.99 kg when i know the grower recieved 60c kg. If they paid $1 and sold for $2 both farmer and customer wins. Bring on blockchain and upstream transparency
Founder - Barden Farms Pty Ltd
3 个月While growers persist in speculative plantings, our peaks will be high and our troughs low. In just about any other business, a prerequisite of production is some or full knowledge of expected demand. What growers’ need is, if not absolute accurate guidance from their customers, who include wholesalers, a proper and honest estimate. On most lines supermarkets base their prices on pricing in the wholesale markets, combined with indications of supply in the short term. The only way growers can have a meaningful say in price negotiations is to apply a base price, or at least obtain a good idea as to the likely return. It is a fact, you don’t need a massive oversupply to tip a market, when a market has a high carry over which isn’t remedied in the short term, we will see low and frequently uneconomic prices. From time to time we will see big crops of tree fruits, and consequently lower prices, that shouldn’t have to mean uneconomical prices.