Supermarkets pressured to raise prices to help farmers hit by drought and bushfires

Food processing companies had a responsibility to primary producers “to ask a fair price and to have that tough negotiation with the supermarket and make them pay it”, Senator McKenzie said.

But Coles and Woolworths did not respond directly to questions about raising prices, instead saying they were working with farmers and processors.

Agriculture Minister Bridget McKenzie says supermarkets need to increase retail prices on fresh food.Credit:AAP

The Morrison government announced on Tuesday grants up to $75,000 to bushfire-hit farmers. Senator McKenzie estimated there were 19,000 farmers, foresters and fishers impacted by the fires and said customers would have to accept higher prices for some produce.

National Farmers Federation president Fiona Simson said farmers were “happy to let the market decide prices” but questioned if Australia’s supermarket duopoly allowed for that to happen.

“We need a wholesale review of retail pricing structures and returns to farmers, in line with consumer sentiment and the support we are seeing for fire victims,” Ms Simson said.

“I think consumers are willing to pay fair prices, and with a potential shortage [from fires] it will cost more to produce some goods.

“The control supermarkets have … over pricing means the market isn’t really deciding,” she said.

A Woolworths spokesperson didn’t comment on the calls for a review of retail pricing, but said the company was “acutely aware of the effects of the drought on Australian growers”.

Woolworths has previously agreed to “hundreds of millions of dollars in wholesale cost increases from our suppliers” and it will work with suppliers to ensure that “fresh food remains affordable for everyday Australian families”, the spokesperson said.

Senator McKenzie said milk was one example of staple products supermarkets are prepared to sell at a loss to attract customers into their stores.

She said while prices may have kept up with inflation, prices were climbing from too low a base to allow for economically sustainable production.

“Two litres of milk was $2.00 at the start of 2019 to $2.39 [now]. I can tell you the farmers producing that would be very happy to only have an increase in cost of production of 17 per cent,” Senator McKenzie said.

“I mean, these are drought-affected dairy farmers whose fodder costs have gone up in excess of 40 per cent, whose electricity costs have gone through the roof. And if you’re a dairy farmer acquiring irrigated water to produce milk, that’s increased [exponentially].”

A Coles spokesperson said the company was assisting farmers as bushfires and extreme weather had disrupted supplies of fresh food and groceries.

“We are working closely with our suppliers to offer support and help them recover, including purchasing fruit and vegetables that may be out of shape, have cosmetic blemishes or be smaller than usual,” the spokesperson said.


In December last year, Coles was forced to pay $5.25 million to members of the northern NSW dairy co-operative Norco when the Australian Competition and Consumer Commission found that not all the money raised from a drought relief campaign was passed on to dairy farmers when the supermarket increased prices by 10¢ a litre.

The bushfires have caused more than 44,000 livestock fatalities across the country, a number expected to rise as the recovery effort continues. More than 4500 beehives have been lost, and state agencies warn that number is expected to rise significantly as well.

Loss of beehives and bushland habitats will affect the pollination required to for many tree crops in including almonds, apples, pears, cherries, macadamias, avocados, and blueberries.

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