Tuesday, April 26, 2011

Down, Down, Up, Up

Published: 19th February 2011

The state of grocery shopping is in turmoil at present with several factors adding to the destabilisation of the marketplace. Floods have inundated crops in many eastern (and western) Australian food growing regions and now cyclone Yasi has added a final touch to the sugar cane, banana and tropical fruit industry. It is said that the two large supermarkets are now weighing up imports of fruit and vegetables for the coming year. ...and they have now initiated a price war on several grocery essentials.

What effects will this have on Australian produce and farmers? Will there be pressure to relax the restrictions on imported produce into Australia at present? What bargain prices will other countries offer to deal with the two Australian supermarket giants? …and will these low prices set a buying precedent that will continue on after Australia has fully recovered from the floods and cyclone?

Down, down the prices are down and price cutting of milk and other commodities has outraged several agri-food groups, and the Australian Food and Grocery Council; slamming the price blitz as unsustainable for farmers, manufacturers and jobs. Using their generic brand for price cutting, the super two talk about absorbing their own cost so farmers and processors are not affected, well yes they are affected; that is, all the other farmers who don’t supply to the major supermarkets. I noticed in one suburban shop the local Misty Mountain brand has even been moved out of the milk fridge section.

Up, up, the prices are up and bananas have quickly reached $6.96 kg. But why so early after Cyclone Yasi? It appears that at least one of the two large retailers has justified this by posting a note in the store to let you know that they have decided to pay the growers double the original price of their existing stock! Great news for the farmer being paid twice as much, but at these prices great for the retailer whose margin could be close to twice as much as well!

Fortunately our banana industry has expanded across the region with plantations on the Tablelands and a very large one in the Lakelands area. This should mean that reasonable priced bananas should still be available at local outlets and markets.

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