The fresh produce market – fair or forked?

The fresh produce market is complex – a sentiment we will keep on repeating to anyone who will listen. When assessing influences on pricing great care must be taken to understand the dynamics at play.    

An economic definition of “fair pricing” refers to the situation where market demand and supply result in prices that provide the ability for participants in a sector to achieve a normal rate of return over time. But start to unpack the influences that drive that supply and demand, and you’d want to be sitting down for a while and that’s even before you could get to a point to discuss what a ‘normal’ rate of return is.  

During our grassroots We Give a Fork campaign we have committed to exposing the myths and calling out bad behaviour including overt, systemic fresh produce market tactics which directly impact growers' viability. So why does it occur? 

In the book "Supermarket Monsters" by Malcolm Knox (2015), former dairy farmer Mike Blacklock sheds light on the supermarkets' strategic approach: "They don't want to destroy the industry, but they want to push prices down to that point just above where they destroy it." 

The fresh produce horticulture sector, due to its perishable and seasonal nature, is remarkably susceptible to the buying and marketing strategies employed by major supermarkets. With supermarkets commanding a whopping 65% market share, the vast majority of reasonably sized growers in Australia find themselves compelled to sell to them. This scenario benefits supermarkets, positioning growers – who have invested substantial capital and settled their bills – as vulnerable negotiators in a market with limited transparency and tight deadlines. 

Woolworths, a major supermarket, asserts that they pay farmers market prices, which fluctuate due to weather, seasonality, and supply and demand. However, the glaring asymmetry persists: supermarkets possess exclusive data on national supply and demand, leaving growers at a disadvantage. 

The market's fairness is further undermined when supermarkets make the decision as to when a grower's produce goes on special, a period during which growers receive even lower returns. Consumers remain largely unaware that growers bear the brunt of these promotions, while supermarkets profit from increased foot traffic and higher spending. 

As multiple tactics are deployed to manipulate supply, growers contend that the market is, indeed, forked. The evidence and testimonials provided by growers align with this perspective, highlighting the need for a reevaluation of fairness in the fresh produce market.