Weekly Times: Retail chains out of line

First published in the Weekly Times.

It’s time to bring the big three supermarket chains to heel with a code of conduct that has teeth, writes David Littleproud.

Australians buy more than 74 per cent of their daily groceries from just three supermarket chains in this country, one of the greatest grocery market concentrations in the world.

This dominance has been created, in all fairness, by the convenience and sheer variety of product they can offer, which has made their businesses nearly bullet-proof.

Billions of dollars are each year pumped through Coles and Wool- worths, and while I acknowledge what they have achieved, Australians should take a moment to stop and reflect on those companies that supply the product for their shelves.

While a significant proportion of their suppliers are multinational conglomerates, just consider the large number of family businesses, including farmers, that all clamber to get their product on their shelves, because that’s where the majority of the market goes to buy.

Controlling billions of dollars of product each year not only gives the supermarkets buying power, it also gives them enormous market power.

While I have little concern for the Unilevers and Nestles of the world, I do for the family businesses that have to negotiate to get access to be able to sell their product.

This is where the power imbalance causes trouble for small businesses, particularly farmers, when the product they are offering is perishable.

Having a short shelf life means the supermarkets have an ability to manipulate their suppliers.

The Nationals started the process to address this with an Australian Competition and Consumer Commission inquiry.

We carried through on its recommendations for better transparency by collating data using digital platforms that will give farmers much of the market data the supermarkets have in negotiating.

The second part of the ACCC recommendations was to strengthen the regulatory framework around the Food and Grocery Code of Conduct, which the supermarkets have voluntarily signed up to.

While the code of conduct is currently useless, there is an opportunity to reform it in five steps, to give it teeth and protect farmers and small suppliers.

Firstly, make the code mandatory.

Secondly, bring in significant punitive penalties of at least $10 million with divestiture powers, which The Nationals have always believed in.

They are already in effect for electricity suppliers. But the possibility of one of the supermarkets losing a chain of liquor outlets would be a penalty in itself, to play nice.

Thirdly, bring the horticulture and dairy codes in as schedules of the Food and Grocery Code of Conduct to enshrine them and complete the supply chain protection.

Fourthly, create an independent, affordable arbiter for farmers and small businesses to have their grievances heard, not the sham that’s in place now, where the supermarkets have their own.

Lastly, complete the ACCC recommendation of reform to Australian Consumer law that won’t just protect farmers, but small businesses dealing with the supermarkets as well.