Following the latest discounting of fresh produce by supermarket chain Coles, the Australian Food and Grocery Council has renewed calls for the need for a Supermarket Ombudsman to ensure Australia's largest manufacturing sector remains profitable.
Coles has announced that it will begin discounting a range of fruit and vegetable items by as much as 50 per cent, a move that AFGC Chief Executive Kate Carnell says is concerning, given the price cuts are not being driven by supply chain competition or lower production costs.
"If these current 'price wars' continue, the profitability of Australia’s food manufacturing sector, as well as farmers, will be eroded and the result could be a significant loss of both processors and producers," she says.
Price discounting has already has significant impacts on food and grocery manufacturing, Ms Carnell notes, adding that "this latest move will obviously impact small producers and spells danger for manufacturing, jobs and regional communities."
This once again highlights the need for a regulated Supermarket Fair Trading Code of Conduct, enforced by a Supermarket Ombudsman, she states.
The establishment of such a system, Ms Carnell says, will assist in creating a more level playing field for primary producers and manufacturers in the food industry in their dealings with Coles and Woolworths.
"Australia and New Zealand has the highest levels of supermarket concentration in the world, delivering significant market power to major supermarkets and making it increasingly difficult for suppliers to negotiate reasonable trading terms and compete with the growing levels of private label products," Ms Carnell states.
This is despite what she describes as overwhelming support from the public and political leaders for a local, value-added food and grocery manufacturing sector.
"It's Australia's largest manufacturing industry that we can’t live without," she concludes.