Fresh produce suppliers are expected to appear before an inquiry into supermarkets following allegations grocery giants used their market power to get the upper hand over farmers, some of whom feared raising their concerns with their contract partners.
The Australian Competition and Consumer Commission is conducting public hearings as part of its supermarkets inquiry, with produce suppliers scheduled to appear on Friday.
Fruit and vegetable suppliers earlier told the commission there was a lack of transparency around pricing and volumes and supermarkets were able to retain a disproportionate amount of the value, leaving suppliers with more of the risk.
Many expressed concerns about their capacity to negotiate prices, the commission noted in its interim report in August.
Other concerns related to supermarkets encouraging oversupply, then rejecting produce more regularly.
“These suppliers suspect some rejections are to manage supply levels rather than reflecting genuine quality concerns,” the commission reported.
Some complained of being held liable for damage caused to produce during freight, while not being able to pick the transport provider.
The commission received 81 submissions from suppliers and held seven roundtable discussions with farmers and wholesalers who were otherwise scared to speak out.
“Suppliers consistently reported they would not raise their concerns with the supermarket due to fear it would jeopardise their commercial relationship,” the commission reported.
Australian Food and Grocery Council chief executive Tanya Barden told the inquiry on Thursday suppliers lacked contractual certainty until purchase orders were made, particularly impacting fresh produce suppliers.
Profitability had also fallen in the industry as manufacturers struggled to pass on their own increasing costs to supermarkets, she said.
The inquiry also heard from consumer advocates on Thursday amid scepticism and frustration over increasing prices.
Representatives from Woolworths, Coles, Aldi and Metcash – which licenses the IGA brand and others – will appear throughout November.
