Turning the tables: why retailers must do better

When growers supplying retailers are being asked to jump over ever higher packaging, quality and other hurdles, can we not expect better treatment at the negotiating table?

There are few silver bullets when it comes to solving the inflationary pressures across the economy, and the costs of agricultural inputs in particular that have risen sharply.

We are told upward cost pressures are driven by a shortage of supply and yet hiking interest rates, the main tool we are relying on to turn inflation around, does nothing to improve supply but simply dampens demand.

So until kinks in our global supply chains are ironed out there is an onus on fresh produce buyers to come back to the table to renegotiate prices that better reflect the new costs of production and keep otherwise profitable growers in the industry.

An increasing number of growers are directly supplying retailers, ALDI, Coles, Woolworths and Metcash, who are signatories to the Food and Grocery Code, designed to improve standards of business conduct in the food and grocery sector.

The Code consists of rules relating to important aspects of the commercial relationship between retailers and their suppliers including grocery supply agreements, the purchase and payment of products, good faith negotiations and an effective dispute resolution framework.

With regard negotiation, the Code requires retailers to accept or reject within 30 days any written price increase requests from suppliers. To keep buyers accountable for their conduct, the Code requires them to report annually on how they have responded to these price increase notices.

Latest reported figures for 2020-21 show less than stellar responsiveness from retailers.

Woolworths received 237 notifications of a price rise request and entered into negotiations with 94 of them. Of these, 75 negotiations were not concluded within 30 days of the initial request being made.

Coles received 1,101 notifications of a price rise request and entered into negotiations with 35. Of these negotiations, 32 did not conclude a position within 30 days.

Aldi received 45 notifications of a price rise request and did not enter into negotiations following the requests.

And Metcash failed to report due to a lack of records.

Growcom on behalf of its members is calling on signatories to the Food and Grocery Code to come back to the table and do better in meeting their own standards of fair dealing.

Growers with queries about the Code or need support through a dispute process are encouraged to contact Growcom for advice.