Produce Prices Skyrocketing, where is the Money Going?

Article by: Hari Yellina

The two biggest grocery chains in the country have rejected charges of price gouging made by a farmer’s representative who believes his clients are being “ripped off”. Despite Coles and Woolworths’ claims that pricing negotiations are fair, a NSW Farmers spokeswoman claimed that producers were only barely earning a profit off marked-up products. So where precisely is that money going? As inflation and supply and demand constraints disrupt the business, consumers are now paying up to $10 for a head of lettuce and $42.80 per kilo for snow peas, among other recent price spikes.

However, Guy Gaeta, the chair of the NSW Farmers Horticulture Committee and a freelance farmer who does not sell directly to Woolworths or Coles, claims that farmers aren’t getting that money returned to them. Gaeta stated to reporters, “I saw punnets of blueberries, $20 a punnet, which is approximately 200g, but I can assure the farmer’s not getting $20 a punnet.” “He’d be in a Maserati or something,” someone said. Gaeta asserted that farmers were bearing the expense of rising global gas prices and the cost of producing goods like fertiliser. Despite factors affecting production costs, he claimed in the media that most farmers were being “ripped off” and were generally tied by fixed-rate contracts, statements that Woolworths and Coles vehemently dispute.

The world’s largest grocery chains reacted angrily to Gaeta’s allegation of price gouging, claiming that the issue of soaring retail costs was complicated. According to Woolworths, allegations regarding fixed-price contracts do not accurately represent the majority of its interactions with suppliers. According to a Coles spokeswoman, the company is still forging multi-generational relationships with farmers, including long-term contracts. A Woolworths spokeswoman the media, “Right now, we’re paying a lot more to our suppliers across the vegetable sector.” Following the east coast flooding and continuous adverse weather in important growing regions, the market’s restricted supply is a major factor in the increase in costs for some types.

The supermarkets claimed that costs were rising in addition to inflation and pressures on supply, including those associated with labour, refrigeration, and delivery trucks used to convey food from distribution centres to stores. “Coles deals directly with growers, on a scale that would not be possible if we bought individually for our 800 plus stores from wholesale markets,” a spokesperson for Coles stated.  “We process more than 20 million customer transactions each week, providing our customers with products from thousands of farmers and suppliers.”