The sight of Victorian citrus farmers bulldozing surplus trees due to the loss of supply contracts is a dramatic way to illustrate the quandary facing both Australian industry and growers.
In April Victorian fruit processor SPC Ardmona, owned by Coca-Cola Amatil, announced it was dramatically cutting its requirements for locally-grown fruit.
More than half of the 150 current peach and pear suppliers were told none of their crop will be required in 2014. Growers are now looking for Federal Government assistance to bulldoze 750,000 surplus trees, while SPC Ardmona has called on the government to impose emergency tariffs on imports to protect the local industry.
But also says it cannot compete against the supermarkets' overseas-sourced “private label” products. “We are competing against products from countries that have considerably lower labour and production costs and arguably lower quality standards than we have in Australia,“ Managing Director Peter Kelly said.
There has been increasing recognition that supermarkets have become the most powerful actors in the global food trade.
Jane Dixon and Bronwyn Isaac’s research explores in detail the problematic and paradoxical role of supermarkets in the Goulburn Valley’s food economy.
While the use of imported produce in supermarkets' home brand products benefits consumers through lower prices, they destabilise the regional agricultural economy and undermine a sense of community by displacing locally owned grocers and butchers.
Part of the issue facing Goulburn Valley growers is historical. Simply, an industry that formerly blossomed under protectionist and interventionist agricultural policies is now facing the realities of global free trade and competition.
The first fruit growers association was formed in the Goulburn Valley in 1891, with the Shepparton Fruit Preserving Company (SPC) established in 1917. In 2002 it merged with the Ardmona Fruit Products Co-Op Ltd to become SPC Ardmona and was acquired by Coca-Cola Amatil in 2005.
Up until the 1980s, the industry was cushioned by protectionist policies; but slowly, Goulburn Valley growers have been put under increasing pressure by international markets.
But the market forces argument ignores several factors.
There is the problem of what happens to the families and communities whose livelihoods have been underpinned by this industry for a century or so.
Johanna’s current PhD research with Victorian orchardists identifies a widespread sense of pessimism and frustration in a system that is dominated by supermarkets and in which growers are constantly under pressure to adhere to stringent quality assurance guidelines over which they have little control.
City of Greater Shepparton Mayor Jenny Houlihan said at a recent community rally “SPC Ardmona is vitally important to our local economy, and it is also part of our identity”.
In our view the growers are there as a result of previous public policy decisions, and so the public, via the apparatus of Government, is to some extent accountable for what happens to them.
Also, we are regularly told we are moving into an era of global food scarcity, with Australia well-placed to benefit by supplying high-quality food to our neighbours. Perhaps the Goulburn Valley situation lends weight to the argument that we are actually poorly prepared to become Asia’s food bowl.
It seems curious that we would allow this industry to wither. The existing complex system of skills, knowledge, infrastructure and supply chain relationships will be much harder to recreate in the future if they are permitted to unravel now.
The challenge is to navigate a path forward whereby the assets of the Goulburn Valley orchard industry are protected, and deployed into an economically viable future. So who should be doing what, if this is to be achieved?
Johanna’s current research indicates growers fare better when they produce multiple products, including a range of both different crops and different varieties, and when they supply multiple buyers and markets, including beyond the dominant retail supply chain. That is a strategy that warrants further investigation from growers and their industry bodies.
SPCA has been vigorously pursuing an innovation and diversification strategy to try to find profitable products and markets, as documented by Libby Hattersley and colleagues, and this needs to continue. This has included developing world-first new packaging technology such as single-serve plastic cups, and resealable plastic jars, as innovations on traditional canning technology. They have also established partnership agreements with overseas companies in order to gain access to new sources of supply and new markets.
There is a good case for Victorian Government involvement given its aim to double Victoria’s agricultural production, and the priority strategies identified in the Goulburn Valley Subregional Plan, part of Regional Development Victoria’s Hume Strategy for Sustainable Communities.
There is also a case for Federal Government involvement, in particular on moderating the power of the supermarkets. We watch keenly the current negotiations between the supermarkets and the Australian Food and Grocery Council.
Growers, communities, industry and government all have a role to play in charting a way forward for this industry. Let’s get on with it.
Jane Dixon's research was funded by the ARC.
Johanna Christensen and Michael Santhanam-Martin do not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article. They also have no relevant affiliations.