In August last year Master Grocers Australia (MGA), a national employer organisation which represents independent grocery supermarkets and liquor retailers in Australia, released its ‘Let’s Have Fair Competition!’ report, calling for regulatory reform to redress alleged abuse of market power and anti-competitive practices that MGA claimed Australia’s supermarket duopoly – Coles and Woolworths – were engaging in.
The Executive Summary of that August 2012 report claims that the duopoly, through tactics such as ‘price discrimination, shopper docket schemes, store saturation and over-sized store strategies [building huge supermarkets in small local markets in order to drive out existing competition and prevent new market entrants]’, is ‘crowding out all competition [and] rapidly reducing the choices in shopping format, brands, locally-derived products and service levels’.
Faced with inaction on the part of policymakers, the MGA released in August this year a follow-up report, ‘Finding a Solution’, which makes a number of specific proposals for reforms to the Competition and Consumer Act to achieve the MGA’s goal of a fairer grocery retail market in Australia.
These are issues that Gary Gardiner, co-proprietor of Paradise Fruits, a small fruit, veg and grocery shop in Sawtell, is all too familiar with.
Gary’s family has been living and farming on small acreages in the Boambee / Coffs Harbour region since about 1890, first in middle Boambee, then to Stadium Drive, and finally on Sawtell Road.
“The original farm was developed as a diverse farm, with dairy and small cropping. In the early 1900s my family did a run to Bellingen and Nambucca to supply the local shops and markets”, Gary told me.
A century ago, family farming on a small property in this region offered a viable livelihood.
“In the older days, 10 acres was about what one family could manage on their own. Any bigger than that, you needed multiple families and / or outside workers”, Gary said.
“Most farmers grew a commercial crop – usually bananas – supplemented with other, smaller, cash crops, like tomatoes, cucumbers or zucchinis. The income from the smaller crops was what they lived on, and what they produced commercially just about covered the costs of running the farm itself”, Gary said.
There was also a strong ethic of self-sufficiency. “Back in those days, most of the food the family ate was produced on the farm as well. That was certainly true during the Depression era – and even we still did that up to the 1970s”, Gary added.
As the food supply chain in Australia became steadily more centralised over the decades, the viability of the small-scale, diversified family farming model was increasingly threatened, as Gary explained:
“About 24 years ago, we were still growing bananas and small crops, and around that time we set up ripening rooms so we could supply the two Coffs Harbour independent supermarkets, Cox’s, and Tucker Bag. But they could only take 10% of our production. But the profit we got from that 10% equalled the returns we got from the other 90% going through the mainstream marketing system.”
“That’s how much we were all getting ripped off”, Gary remembers. “So we [aimed to] take out the middle men. And when you do that, you have a chance of actually making a living [as a grower].”
“It’s basically the difference between being a price-maker and a price-taker. If you were selling to the [central] markets, new cartons had to be used, so you had to buy those – $1.50 each. Freight – $1 per carton to get the product to market. Agent’s commission – $3 a carton back then. We were only getting $10 a carton.”
“And during the summer, when there was a glut, we got nothing back at all. You’d be doing all of that work, carrying all those costs, and you’d actually be paying to send your product to market, and you’d get nothing for it.”
Cox’s and Tucker Bag closed their doors not long after Woolworths opened, in the late 1980s. We’ll hear Gary’s thoughts on the impacts of the supermarket duopoly next time.
