A not-so-minor or popular rant coming up here, initially provoked by today’s announcement by Coles Supermarkets that they will be reducing prices across a number of items in their fresh produce departments, though largely fuelled by the media and some regular offenders’ contributions to the discussion of this announcement.

The headlines say it all; “Concerns over fruit & vegetable discounting”, “Fear for farmers over Coles cuts” and so on. In my mind, they should read: “People complaining about cheaper prices”.

The irony I find in the situation is expressed henceforth. In a society where everyone, particularly the populist media, makes such an issue of the supposed high costs of living for everyday Australians, they see it fit to jump on the big supermarkets whenever they say anything, positive or negative.We saw the same thing happen when Coles and Woolworths announced last year that they were decreasing the price of milk and bread –  a populist anger and outrage that prices were being reduced for consumers. Why?!

Now’s the part where everyone will chime in claiming that the supermarkets through their duopoly over the grocery sector in this country use their market power to pay pittance to farmers for their produce, only to sell it with high profit margins in their stores nationwide, and that these price cuts will only see farmers paid less for their produce. While I’m not going to deny that supermarkets undoubtedly make efforts to reduce the wholesale cost for the products they sell, all I can say is, who can blame them? A supermarket, like any other shop in the world, is a business. It provides a service and aims to profit from doing so. People seem to have this fanciful notion that supermarkets exist (or at least should exist) solely for the good of their suppliers and customers, when nothing could be further from the truth. They aim to make money, that’s the purpose of their existence! And a business makes money if it minimises its expenses (aka the price it pays for the products it sources), and maximises its takings (aka the price you pay at the register for those products).

So to get back to what I was trying to say, today in the media we had everyone from an AusVeg spokesman, the CEO of the National Farmers Federation, a spokeswoman from that defender of consumer rights (translation: the mob that aims to protect people from their own stupidity when shopping) Choice, and even the Greens coming out and criticising Coles decision to cut these prices, despite not actually knowing what items specifically would be reduced in retail price. AusVeg, the NFF and the Greens were touting much the same argument, namely that lower retail prices inevitably translates into lower wholesale prices for producers, and that’s bad for farmers. Choice’s main concern that these items were being used as loss-leaders; namely cheap deals that lure customers into stores with the intention of then enticing these customers to buy other premium-priced products as well.

Let’s deal with these concerns in order. For starters, the NFF is the organisation dedicated to protecting farmers’ rights and livelihoods, or as they dub themselves, “the voice of Australian farmers”. They act much like a workplace union would, attempting to lobby for additional rights and benefits for farmers. Essentially their aim and purpose of existence is to help farmers make as much money as possible. They would be quite pleased to see farmers be able to charge top dollar for the produce, which is essentially what is being argued for here. However, if Coles and Woolies were forced to pay top dollar to obtain produce, let’s examine the real impacts. Prices would rise for produce in Australian supermarkets, as wholesale prices would increase and the supermarkets would have to maintain their margins. So suddenly your $2 kilo of bananas would cost more like $4 or $5, as would everything else increase. If that were to happen, imagine the outrage from the cost-of-living-concerned individuals and tabloid newspapers/”current affairs” shows then!

The Greens coming out in defence of Australian farmers continues a string of patriotic-bordering-on-xenophobic policy statements recently regarding the protection of Australian farming and the limiting of overseas ownership of Australian farms and the importation of food. Confusing really, considering the Greens are the party who actively promote and support multiculturalism in every other way. While their concerns for the financial stability of Australian farms and farmers are noble, I sense it is a little in vain. To this day I’m yet to meet a farmer or anyone from the land who would even entertain the concept of voting Green, yet the residents of their one seat of Melbourne would be far happier with cheaper supermarket produce.

And Choice, don’t get me started on Choice. As I said earlier, their sole purpose for existence is to protect idiots from their own stupidity, and that is only proven by the arguments offered by spokeswoman Ingrid Just today on ABC News. Yes, a loss-leader is a product marketed below cost to attract people to your store, and yes, not all products in a supermarket will be loss-leaders, because it’d be a pretty stupid way to run a supermarket if all your products sold for less than they cost. However, if you’re not a gullible fool you’ll realise this, and realise that you can buy your cheap fruit and vegetables without paying extra for other products, and you as the consumer will win, which is what Choice claim to be all about supporting. How a consumer group can oppose lower prices really confuses me, and only convinces me of their continued irrelevance. Though Ms Just’s explanation of a loss-leader does shoot down the arguments made by the NFF and the Greens earlier that farmers will solely bear the burden of the reduced prices.

However, despite these pointless comments from vested-interest groups, one thing has gone amiss in this discussion: fact. The fact is that growing conditions in many parts of Australia over the last few seasons have been the best they’ve been for nearly 20 years. As a result, the supply of many fruits and vegetables available is grossly in excess of demand. Coles’ solution is this: rather than seeing excess product go unsold and have farmers turning tonnes of their good quality produce into fertiliser for their next crop, why not spark an increase in demand by lowering retail prices. That way sales increase so farmers can move more produce (which as any producer will tell you, selling stock cheap is better than not selling stock at all), and retail sales improve due to reduced prices. Not to mention, we the consumers get cheap food. It’s making the best of the situation.

Now I don’t mean to stand here and be a supermarket apologist. And yes, I know you’ll all claim I’m biased as I worked for one of the major supermarkets. However, all I’m doing is presenting the facts and what I believe to be the case, without the usual vitriolic hatred directed at supermarkets from most parts of the media and of popular opinion in general, or for that matter any profit-making institutions in this country. All I ask is, can you say the same for what you believe?

Now I’m off to buy some cheap veggies…

Advertisements