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Growers demand inquiry, ombudsman sought

Published: 6:23PM Monday July 05, 2010 Source: ONE News

Fruit and vegetable growers are calling for an inquiry into allegations that supermarkets are charging customers up to five times as much as they pay suppliers.

The boss of one major chain says the margins are much lower, but fed up growers are taking direct action.

Market gardener Ray Goddard has been growing carrots at Sawyers Bay near Dunedin all his life, but says he is through supplying the supermarkets.

"It's just straight out greed," he says.

Goddard says he is happy to cut production and sell to Otago Farmers Market rather than help fill supermarket vegetable bins.

"The main reason is that they weren't paying enough to cover our cost of production. We were just losing money hand over fist. We just couldn't keep doing that."

All 6,500 of New Zealand's growers are members of Horticulture New Zealand. It is demanding an inquiry and backing up a report by the Green Party that 200% mark-ups are commonplace in supermarkets' vegetable aisles.

ONE News visited an independent fruit store, Vege Oasis. It says it pays about $1.50 a kilo for mandarins it has on special at $1.99.

"We work on low margins to serve our communities," says Baldev Singh of Vege Oasis.

His competition is over the road, so ONE News compared their prices. The manadarins at Countdown were nearly $5 a kilo, more than twice the price, while apples were the same price.

Foodstuffs managing director Tony Carter told TVNZ's Close Up that the two largest supermarket chains in the country - Foodstuffs and Progressive - are competing everyday with independent produce outlets.

But Green MP Sue Kedgley says that unlike Goddard, many growers are too fearful to criticise the supermarkets and risk losing their livelihoods.

"These two guys (Foodstuffs and Progressive) are the only game in town. They are the duopoly, they own 95% of the grocery retail and the growers I've spoken too are terrified off getting off side with these guys."

Kedgley says the margins were just not sustainable for the growers.

"About 87% of growers said they had to sell their produce sometimes or often below the cost of production."

Supermarket ombudsman?

Kedgley says New Zealand needs to follow the example of the United Kingdom by creating a "supermarket ombudsman" role that's needed to enable the arbitration of disputes anonymously.

"My suggestion is that we follow the example of the United Kingdom where they have a code of conduct that they have agreed on and they have a supermarket ombudsmen, like a banking ombudsmen, just to have some fair rules,"

She says growers also want an independent monitor of food pricing.

But Carter expresses concern with the idea of a "supermarket ombudsman".

"I'm a bit concerned with the concept of an ombudsmen because that implies a bureaucracy to a ministrate and that will be expensive and ultimately the consumer will pay."

General Manager for Fresh Food at Progressive Brett Ashley said it already has a code of ethics at Countdown that they operate on.

However, both the supermarket chains say they would not rule out working along side Horticulture New Zealand and the Food and Grocery Council in coming up with a new code of conduct.

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  • Juanita01 said on 2010-07-05 @ 12:17 NZDT: Report abusive post

    I run a small supermarket and have access to the pricing that the large stores a paying. Believe me they are not making 500% mark up. That is just ridiculous. Supermarkets have large costs they have to recover and therefore will not be as cheap on all items like smaller fruit and vege shops but on the whole I believe the pricing is competitive and they are making ok margins. No one would be in business if they were making 500% mark ups