"There's a bit of a myth that farmers get up in the morning and they hoe their fields and they load their trucks and go to market," says agrifood consultant David McKinna. "The reality is that in most high-volume categories … seven or eight producers supply 80 per cent of Australia's supply. They are very big companies."
Supplying the supermarkets with fresh food is a huge commercial undertaking. The Fresh Produce Group turns over $200 million a year supplying citrus, grapes, tropical fruit, potatoes, onions and pumpkins to the supermarkets. Within five years the company spent millions to scale up for the supermarkets, adding to the business a market research department, compliance and innovation experts, product technologists and quality-control professionals. It has built warehouses close to distribution centres and expanded into the intellectual property of fruit and vegetable varieties.
Two supermarket companies, Coles and Woolworths-Safeway, account for 60 per cent of Australia's fresh fruit and vegetable market. These days, a potato or carrot is virtually owned by Coles and Woolworths before it is dug out of the ground. It is a power shift from small growers supplying local markets to big farmers and agents, known as ''aggregators'' and ''category captains''. There were almost 200,000 farm businesses in 1969 down to only 134,000 in 2010, and the average farm has grown in size from about 2500 hectares in 1969 to 3400 hectares in 2004-05. Small farmers being squeezed out by the big supermarket chains. A senior state government source told The Age that the way the food industry is developing there will be only large-scale, internationally competitive farming, and niche farming. ''There will be no middle ground,'' the source said.
Greg Davis, Coles general manager of fresh produce and bakery explains "If you are producing carrots in a small paddock and supplying them to the central markets, you are never really going to compete, and never have competed, with a very large farmer who has all the capital infrastructure.''
Smaller growers who do not supply supermarkets are affected by the supermarket-driven downward pressure on prices. ''Regardless of what they say, that has had an absolutely horrific effect on prices of all fruit and vegetables this year,'' says Cobram fruit grower Ray Poole, who does not supply the supermarkets. ''They don't admit it, but supermarkets manipulate the market.''
University of Queensland sociologist Kristen Lyons, who has been researching food and agriculture for 15 years, says "Here we have something like 70 to 75 per cent of food sales going through Coles and Woolies. It creates all sorts of dependencies...We now need to be thinking about food systems in a climate-changed world. We have to be thinking about diversity across the board, in terms of the farming systems, distribution systems and retail systems.''
Joe Pignataro grows 40 per cent of Coles' strawberries. His business, one of four major players in strawberries, started in 1961 with two hectares in the Yarra Valley. He now produces 15 million punnets across the year on 200 hectares in the Yarra Valley and 200 hectares in Queensland.
As companies have scaled up to meet the supermarkets' demands, massive agricultural businesses have sprouted on the regional landscape. In South Australia, the Mitolo Group is the biggest producer of potatoes for fresh consumption in Australia. It produces for Coles and has a $100 million turnover and just 350 employees.
Tomatoes grown in glasshouses are also big business. The Victorian-based Costa Group has become the biggest supplier of glasshouse-grown tomatoes after investing millions in two 10-hectare glasshouses in northern New South Wales. The facility produces 11 million kilograms of tomatoes each year.
Melbourne University food policy researcher Kirsten Larsen says the problem with the concentration of supply is that farms have to get bigger and bigger to survive and keep up with supermarket demand. That means having to move further and further away from key centres such as Melbourne and Sydney, where land is not affordable. She says if farmers have to move to less suitable areas they may become reliant on fertilisers or irrigation and even more heavily dependent on long-haul transport.
Gyorgy Scrinis, who teaches a subject in food politics at Melbourne University, says the supermarket supply chains have other consequences, too.''The imposition of supermarket-driven standards and concentrated market power over suppliers means high levels of food waste along the supply chain. Large quantities of produce never leave the farm gate and go to waste, such as crooked carrots and blemished bananas, because they don't meet supermarket-defined aesthetic and other quality standards.''
All this has led to renowned chef Stefano de Pieri to plead that ''We have to stop this race for the cheapest and nastiest and basically corporatised agriculture. It leaves us culturally poor. It means we will end up with three types of grapes, two types of oranges, one type of cheese. That's the thing that worries me; when you sacrifice prices you sacrifice all of that richness"
Source
Supplying the supermarkets with fresh food is a huge commercial undertaking. The Fresh Produce Group turns over $200 million a year supplying citrus, grapes, tropical fruit, potatoes, onions and pumpkins to the supermarkets. Within five years the company spent millions to scale up for the supermarkets, adding to the business a market research department, compliance and innovation experts, product technologists and quality-control professionals. It has built warehouses close to distribution centres and expanded into the intellectual property of fruit and vegetable varieties.
Two supermarket companies, Coles and Woolworths-Safeway, account for 60 per cent of Australia's fresh fruit and vegetable market. These days, a potato or carrot is virtually owned by Coles and Woolworths before it is dug out of the ground. It is a power shift from small growers supplying local markets to big farmers and agents, known as ''aggregators'' and ''category captains''. There were almost 200,000 farm businesses in 1969 down to only 134,000 in 2010, and the average farm has grown in size from about 2500 hectares in 1969 to 3400 hectares in 2004-05. Small farmers being squeezed out by the big supermarket chains. A senior state government source told The Age that the way the food industry is developing there will be only large-scale, internationally competitive farming, and niche farming. ''There will be no middle ground,'' the source said.
Greg Davis, Coles general manager of fresh produce and bakery explains "If you are producing carrots in a small paddock and supplying them to the central markets, you are never really going to compete, and never have competed, with a very large farmer who has all the capital infrastructure.''
Smaller growers who do not supply supermarkets are affected by the supermarket-driven downward pressure on prices. ''Regardless of what they say, that has had an absolutely horrific effect on prices of all fruit and vegetables this year,'' says Cobram fruit grower Ray Poole, who does not supply the supermarkets. ''They don't admit it, but supermarkets manipulate the market.''
University of Queensland sociologist Kristen Lyons, who has been researching food and agriculture for 15 years, says "Here we have something like 70 to 75 per cent of food sales going through Coles and Woolies. It creates all sorts of dependencies...We now need to be thinking about food systems in a climate-changed world. We have to be thinking about diversity across the board, in terms of the farming systems, distribution systems and retail systems.''
Joe Pignataro grows 40 per cent of Coles' strawberries. His business, one of four major players in strawberries, started in 1961 with two hectares in the Yarra Valley. He now produces 15 million punnets across the year on 200 hectares in the Yarra Valley and 200 hectares in Queensland.
As companies have scaled up to meet the supermarkets' demands, massive agricultural businesses have sprouted on the regional landscape. In South Australia, the Mitolo Group is the biggest producer of potatoes for fresh consumption in Australia. It produces for Coles and has a $100 million turnover and just 350 employees.
Tomatoes grown in glasshouses are also big business. The Victorian-based Costa Group has become the biggest supplier of glasshouse-grown tomatoes after investing millions in two 10-hectare glasshouses in northern New South Wales. The facility produces 11 million kilograms of tomatoes each year.
Melbourne University food policy researcher Kirsten Larsen says the problem with the concentration of supply is that farms have to get bigger and bigger to survive and keep up with supermarket demand. That means having to move further and further away from key centres such as Melbourne and Sydney, where land is not affordable. She says if farmers have to move to less suitable areas they may become reliant on fertilisers or irrigation and even more heavily dependent on long-haul transport.
Gyorgy Scrinis, who teaches a subject in food politics at Melbourne University, says the supermarket supply chains have other consequences, too.''The imposition of supermarket-driven standards and concentrated market power over suppliers means high levels of food waste along the supply chain. Large quantities of produce never leave the farm gate and go to waste, such as crooked carrots and blemished bananas, because they don't meet supermarket-defined aesthetic and other quality standards.''
All this has led to renowned chef Stefano de Pieri to plead that ''We have to stop this race for the cheapest and nastiest and basically corporatised agriculture. It leaves us culturally poor. It means we will end up with three types of grapes, two types of oranges, one type of cheese. That's the thing that worries me; when you sacrifice prices you sacrifice all of that richness"
Source
In Spain farm prices for olive oil is being pushed down by the Supermarkets. Although under Spanish competition law it is illegal to sell below cost supermarkets get round this by selling at a few cents above the cost price without factoring in transport, labour or fixed capital costs. Olive oil is the loss leader par excellence of Spanish supermarkets.
ReplyDeletehttp://www.guardian.co.uk/world/2012/jun/04/spain-olive-farmers-squeeze-price