SALLIE JONES, GIPPSLAND JERSEY: Gippsland Jersey was created in 2016. We are a little milk brand that is all about paying farmers a fair price.
We are supplying to a number of Woolworths stores and Coles. It’s an amazing opportunity because most of the people in the population shop at these supermarkets, so you need to be where they are.
WILL MURRAY, REPORTER: Sallie Jones thought getting a space on the supermarket shelves was going to take her business to the next level and secure a future for farmers in her area.
But it turned out to be just the start of a whole new battle.
SALLIE JONES: We’ve worked really hard for the past two years trying to make the Coles supermarket sales really work, and for us to be able to sell the units required per store per week.
We can only ever fit 10 bottles of milk on the supermarket shelf at any one time. There’s also another issue around the fact that we can’t give them the margin that they require.
WILL MURRAY: Gippsland Jersey says Coles wanted more than 30 per cent, which they argued was unsustainable. They’ve now been told their product will be removed from most Victorian Coles by the end of the month.
In a statement Coles said, “Unfortunately in instances where high volumes of product is being thrown out or marked down due to low customer demand, we have to make the difficult decision to reassess where we can sell it.”
SALLIE JONES: I don’t think you can ever beat the big guys. We are not in the business of being able to supply milk to them at the risk of us going broke. We just can’t do it, there’s not enough margin in fresh white milk for us to be able to do that.
WILL MURRAY: The food and grocery code requires supermarkets to act ‘in good faith’ when negotiating with suppliers.
But it’s voluntary to sign up, and if a farmer wants to dispute a deal, they first need to turn to the code arbiter who has been appointed by the supermarket.
CHARLIE THOMAS, NATIONAL FARMERS FEDERATION: There was always this perception that that person was obviously appointed by the supermarkets and couldn’t be fully trusted by the growers in raising their concerns.
WILL MURRAY: Charlie Thomas from the National Farmers Federation says it meant suppliers hardly ever complained because the perceived risk of annoying the supermarket far outweighed their chances of success through arbitration.
CHARLIE THOMAS: And what they feared was that the supermarkets would withhold future commercial agreements from those farmers because they’ve spoken up and raised concerns.
WILL MURRAY: To address the power imbalance, former Labor frontbencher Craig Emerson has recommended significant changes to the code following a review.
First, it would be mandatory for all grocers with over $5 billion in annual turnover to sign up which currently includes Coles, Woolworths, Aldi and wholesaler Metcash, which supplies to IGAs and Foodland.
An independent mediator would be made available to handle disputes and the fines for supermarkets not complying with the code would be significantly increased.
CHARLIE THOMAS: It’s a huge day for us as an industry. We’ve been seeking this outcome of a mandatory code and some serious penalties attached to it for a very long time.
WILL MURRAY: The federal government has said it will adopt all the recommendations and affected supermarkets say they will continue to operate under the rules of the code to which they are voluntary signatories.
As to whether the broader public will notice a difference.
NICK MCKIM, GREENS SENATOR: A mandatory code of conduct will help farmers and that’s a good thing, but it will do nothing to bring down food and grocery prices for shoppers who are being price gouged.
WILL MURRAY: Greens Senator Nick McKim chaired a recent senate inquiry into supermarket prices.
He argues prices will remain high until more is done to break the market dominance of the big players.
NICK MCKIM: Until we get divestiture laws in Australia to create more competition in the supermarket sector, until we make price gouging illegal in Australia, as they have in the European Union, shoppers will still get price gouged, they will be paying too much for food and groceries at the supermarket checkout.
WILL MURRAY: Rich Tourino and Jonathan Englert have made a business out of selling the 25 per cent of vegetables that don’t leave the farm.
They were disappointed the review didn’t do more to address the aesthetic standards supermarkets adopt.
JONATHAN ENGLERT, GOOD AND FUGLY: We thought that if there was a focus on allowing a wider range of produce, meaning things that weren’t as perfect into the mix, then that would help farmers, it would help consumers, and it would be a much faster path probably to helping in the affordability space.
WILL MURRAY: The recommendations do include that fresh produce standards and specifications must be reasonable, but Rich and Jonathan think that’s too vague to make any real difference.
RICHARD TOURINO, GOOD AND FUGLY: If the supermarkets were forced to loosen their specs, the farmers would get paid more for the work they do, they’d be able to sustain cheaper prices as well, which obviously means the consumer would benefit.
WILL MURRAY: The National Farmers Federation says any measures to improve the health of the agriculture industry will help keep prices down.
CHARLIE THOMAS: 37 per cent of vegetable producers are considering walking away from the industry. Now ultimately if you have fewer farmers farming, that’s less supply of fresh Aussie produce coming onto our shelves, that can only push prices up.
SALLIE JONES: Every little bit will help, so we’re heading in the right direction.
But the call to action is about the consumer, the Australian people showing up and demanding that the supermarkets stock Australian owned and made products.
Farmers love what they do, but they also can’t do it for free.