Since the Commerce Commission released its final report into the grocery sector this week, fresh produce growers are hesitant to speak out about the possibility that they might soon have more bargaining power with supermarkets.
The report recommended addressing imbalances in bargaining power between the major grocery retailers and suppliers through a mandatory grocery code of conduct, considering enabling collective bargaining by some suppliers, and strengthening the Fair Trading Act’s business-to-business unfair contract terms provisions.
HortNZ welcomed the move and said it should help growers get a better return on their investment. But growers were less sure.
The corporate structure of supermarkets meant there were large margins added to fresh produce costs. One grower noted that while his farm was located less than 5km from a Countdown he supplied, due to the way transport was managed, fresh produce was picked up from his farm, taken to a distribution centre in Mt. Wellington, and then taken back to the Pukekohe supermarket for sale the next day.
Such corporate-style transport arrangements added to consumer costs, he said. This was in contrast to small greengrocers he supplied who often had one employee who would pick up produce directly from his farm and who would then stock the shelves themselves.
Other growers have commented that the prices farmers received for goods were determined by supply and demand. As a result farmers received higher prices for their produce when there were fewer products available, but a large demand from consumers for products.
Likewise, when there was an abundance of supply of fresh produce, and low demand from consumers for a specific product, farmers received lower prices for their produce. During these times growers were at the mercy of supermarkets because produce that was not sold would rot.
HortNZ chief executive Nadine Tunley has previously expressed that grower returns have not increased for at least 10 years but retail costs had steadily increased.