Fruit and veges are being pulped by cheap shots

Kate Dowler
March 21, 2013
Herald Sun

AUSTRALIA’S fruit-and-vegetable processing sector is on its knees. Yet the Federal Government continues to ignore these businesses’ plight, the thousands of workers they support, growers who supply them and the Australians who want a vibrant local food industry.

In a special report this week The Weekly Times revealed that since 2009, 11 major processors have closed, the sector has lost more than $800 million and 1200 direct jobs have gone. The collapse has been on the cards for a decade. But it has escalated rapidly recently.

The Weekly Times has warned for years of the likely impact of the policies that have allowed this outcome. Experts warned in 2005 that a new push by supermarkets to sell cheap imports would knock Australian products off shelves.

But that was ignored. The last Australian-owned vegetable cannery went into administration last week.

Seven years ago SPC Ardmona warned the home-brands push by big supermarkets would advantage cheap, imported products. Exactly what SPC warned has happened.

It says the local industry may never recover and it wants the Government to intervene before it is too late.

“We are currently undergoing a once-in-a-lifetime appreciation in the Australian dollar that has made cheap imported food even cheaper,” an SPC spokesman said. “This cheap product inevitably makes its way into private label products in the supermarkets at very low prices, making it difficult for our branded products to profitably compete.

“If nothing changes, our industry will be significantly weakened and it may not be able to recover when the dollar returns to more normal levels.”

Both Coles and Woolworths said this week they were now trying to source more local product. But that won’t comfort those who have already been forced out of business due to the sharp rise in cheap imported products that pushed local brands off the shelves.

Three years ago, referencing several government inquiries that proved widespread abuse of market power and a lack of transparency, the Horticulture Australia Council called for an ombudsman to enforce a code of conduct for all transactions linking growers to consumers – with wholesalers, supermarkets, processors and exporters.

That was also brushed aside by the Federal Government. To this day, it is still only talking about mandating a code.

The bottom line is governments must ensure they are creating open markets to give all players a fair go at making reasonable margins
The high Australian dollar is a hard problem to fix. But for Agriculture Minister Joe Ludwig and others to repeatedly point to it, yet wash their hands of any other ideas to help the sector, is insufficient. As the canned fruit industry council’s John Wilson put it this week, the Government is failing to make jobs a priority.

They’ve allowed, as Mr Wilson put it, supermarkets to use merchandising tactics that were “deceptive at best and deceitful at worst”.
He said they used copycat packaging to mimic Australian products and were “careful to not draw attention to country of origin”.

“It all stems from the higher level of policy that maintains a high Australian dollar to keep inflation low and therefore it’s in the interest of fiscal policy, not necessarily in the interests of Australian jobs.”

Governments have allowed the supermarket duopoly to become one of the world’s most concentrated.

Reports are also surfacing this week that Woolworths may go around processors to buy milk direct off-farm. It remains to be seen what impact cutting out this supply chain link could have. But regulators should keep in mind a warning from agricultural policy analysts this week; that dominant supermarket operations must be more transparent or supply chain fairness would continue to be threatened.

The bottom line is governments must ensure they are creating open markets to give all players a fair go at making reasonable margins.
They also need to put more effort into negotiating new export markets and stop cutting research and development – a driver of innovation to help us compete.

And, bring in simple labelling laws.

For the sake of jobs and businesses, leaders must shake off their indifference to the fruit-and-vegetable processing sector.
Kate Dowler is The Weekly Times state political reporter