What's Happening in Fresh Produce



Coles sales rise despite grocery price war

Wesfarmers has reported a rise in third-quarter sales at its Coles supermarkets despite a record drop in prices as the supermarket price war rages.

Coles' sales increased 4.1 per cent to $6.1 billion from the same period last year, while sales at Wesfarmers' home improvement and office supplies unit, which includes the Bunnings chain, rose 4 per cent to just over $2.1 billion.

Wesfarmers managing director Richard Goyder says large falls in the cost of fruit and vegetables also put downward pressure on prices at Coles.

The latest consumer price figures from the Bureau of Statistics, released after Coles' sales report, showed that fruit prices had dived 30 per cent in the period, due partially to improved growing conditions following a spate of natural disasters around the country.

"Coles' total sales growth of 4.1 per cent during the quarter was strong particularly given a record level of price deflation, driven by fresh produce deflation of around 25 per cent for the quarter," Mr Goyder said.

Mr Goyder says Wesfarmers expects to be able to minimise the potential impact of the carbon tax through measures such as more efficient refrigeration.

"We're doing a lot of work on energy efficiency, and in particular in Coles around refrigeration and a number of other initiatives, and we expect to be able to mitigate a significant amount of the cost impact within Coles," he said.

Discount wars blamed as another tomato grower falls

ANOTHER major Queensland tomato grower has gone broke, putting 41 employees out of work and raising further fears farmers are losing the battle to compete profitably on local and world markets

Bundaberg-based Basacar Produce, one of the largest suppliers of cherry tomatoes to Coles supermarkets, went into administration last week with debts of more than $3.5 million.

Basacar Produce, run and owned by husband and wife directors Ayhan and Zubeyde Basacar, sold 4500 trays of cherry tomatoes to Coles daily from its four Bundaberg farms and two modern packing sheds.

It is the third major tomato operation to collapse recently, after massive tomato grower SP Exports went bust in February owing $31m and Barbera Produce failed in September.

Richard Mulcahy, chief executive of AUSVEG, the industry body representing Australia's 9000 vegetable and potato growers, wrote yesterday to Agriculture Minister Joe Ludwig to voice his concern.

AUSVEG wants the federal government to convene a summit to investigate the cause underlying the devastating closure of so many successful vegetable businesses and the resulting loss of industry jobs and support operations.

Mr Mulcahy blamed the supermarket discount price wars for the industry mayhem.

"It is extremely concerning that operators are being forced out of the industry due to increasing costs of production and the slim margins these growers are being forced to accept as a result of supermarket pricing tactics," he said.

Increasing labour costs are also a problem. Mr Mulcahy said in New Zealand vegetable growers paid employees $13 an hour, compared with Australian worker rates of $26 an hour.

Peter Hockings, head of the Bundaberg Fruit and Vegetable Growers Association, described the mood in his region as grim following the Basacar collapse.

He said that while growers were reluctant to blame Coles and Woolworths for fear of offending them, grower returns had not increased over the past three years while input costs for labour, power and chemicals had soared.

Suppliers, manufacturers and distributors in Australasia’s foodservice sector are collaborating to improve supply chain processes and standards.

Key players in the foodservice sector have formed the ‘GS1 Australasian Foodservice Industry Steering Group’ (FISG). The group’s aim is to drive improvements in cost efficiencies, methodologies and traceability in the foodservice supply chain.

FISG members include PFD Food Services, GS1 Australia, McCain, Bidvest, Snap Fresh, NAFDA, Food SA, Countrywide Australasia, Simplot, Foodservice Suppliers Association of Australia, National Foods and Nestlé Australia.

Nestlé’s Supply Chain Technology Manager, Mandeep Sodhi, has been appointed to the role of Chairman of the new group.
CEO of GS1 Australia, Maria Palazzolo said, “The business of food is changing fast. There are many cost reductions, efficiency gains and improved traceability available to foodservice businesses through supply chain best practice.

“With the industry working together, these standards will drive measurable improvements in efficiency, product information, and safety for foodservice businesses individually and the industry as a whole.”