Four Corners - Price We Pay, The
Coles and Woolworth's sell 70 per cent of the dry groceries and half the fresh food that Australians consume – among the highest concentrations of market power in the developed world. The ACCC has officially ticked this arrangement, insisting the market is working. But the growth in supermarket muscle has come at a cost to many suppliers and small retailers. A pumpkin grower, whose produce retails for as much as 10 times the price he gets for it, scoffs at the ACCC's view that the gap between farm gate prices and the checkout isn't growing.
Four Corners meets an ice-cream maker who buys a lot of milk – and bizarrely he gets it cheaper from his local supermarket than from the wholesale processor. Why? Because the wholesaler has to accept ultra low prices from the supermarket - and compensates by inflating his price to smaller buyers, says the ice-cream man.
Suppliers can reel off a list of punishing "rebates" – fees - that they must pay supermarkets for product promotions, to get paid on time, or just for the privilege and opportunity of supplying goods. But few are bold enough to do so publicly. Like suppliers to the big supermarkets, minnow retailers are fed up – but more outspoken. Small liquor merchants can get some beer and wine cheaper from supermarket-owned retail grog barns than they can from wholesalers.
While Coles' and Woolies' market clout can translate into cheap prices for consumers, there are fears it may threaten the survival of Australia's food industry. As reporter Stephen Long reveals, these concerns are held by eminent people at the very top of the food chain.
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