Getting a better deal for growers

By Geoff Lewis

Making sure the little guys get a fair deal will be a key theme covered by New Zealand Food and Grocery Council chief executive Katherine Rich at this year's Horticulture New Zealand Conference.

The current supermarket scene is dominated by a 'duopoly' of two large companies – the Australian-owned Progressive Enterprises and the Foodstuffs cooperative which provides the vast majority of the grocery trade around New Zealand and importantly for those in horticulture, a large part of the fresh produce market.

However, growers of fresh produce can often become the casualties in the competition between these two large companies, Katherine says. “New Zealand’s supermarket duopoly is causing significant issues for suppliers and consumers. For suppliers, squeezed margins are resulting in under-investment, undersupply and reduced innovation. For consumers there is less choice, variety, innovation, price, and other non-price competition.

For suppliers, squeezed margins are resulting in under-investment, undersupply and reduced innovation

“At the moment growers are caught between two supermarket chains where there is no competition on the supply side. There is the general feeling that growers are price-takers – they take what the big chains will give them.” Katherine Rich cited a strawberry grower she had recently talked to.

“He told me he was getting the same price he was 45 years ago.“ She is awaiting the outcome of the Commerce Commission's Market Study, due out in the week before the conference, and hopes it will result in a Grocery Code of Conduct as is found in the United States, Canada and Australia. “The code works well in those markets, making sure smaller manufacturers and growers get a fair deal and improving transparency. We need to introduce a mandatory code which sets out how supermarkets deal with suppliers, payments, deductions, rebates and levies.

Katherine Rich, New Zealand Food and Grocery Council chief executive

For consumers there is less choice, variety, innovation, price, and other non-price competition

Katherine says New Zealand's growers and grocery manufacturers are facing the perfect storm. “We've had quite a few smaller producers sell out to bigger companies. If they can't make a profit and pass costs on it makes it difficult.“

A variety of what had been New Zealand-based grocery manufacturing operations has disappeared over the past few decades.

“And these used to be major players in starting young people into these industries.“ Katherine says the conference will give her the opportunity to talk to growers and farmers and congratulated HortNZ on its pro-active stance.

Katherine Rich is chair of Fairtrade Australia New Zealand, deputy chair of the Food Safety Advisory and Assurance Council, and a board member of the Health Promotion Agency.