Local manufacturers call for dedicated Australian-made aisles in supermarkets

Australian food manufacturers are calling for a dedicated “Australian made” aisle in supermarkets to make it easier for consumers to choose locally made products and keep local businesses afloat.

Glenn Cooper, chairman of Australia’s largest beer brewer and entrepreneur Dick Smith are just two of the high profile names calling on the industry to take action.

Cooper believes laws which force supermarkets to set aside a minimum quota of floor space for locally-made food would be one way to slow the flood of cheap imports and prevent some manufacturers from tricking consumers into buying products they think are made in Australia, but are in fact made primarily from imported products.

"It’s not realistic for busy shoppers to read every label to see its country of origin before you put it in your trolley," Cooper told Channel 7’s Out Of The Blue program.

"So I think they [supermarkets] should be forced to have a certain amount of locally grown content and that it should appear in a clearly defined area designated for Australian-made products only.

"That may mean two milk areas, two butter areas but at least customers, when they choose something from that designated area, know they are buying Australian-made products," he said.

Coopers became Australia’s largest brewer following Foster’s controversial sale to London-based SABMiller in September last year, and has always pledged to remain proudly Australian made and owned.

“Being the largest Australian-owned brewer is a badge of honour we will wear with pride,” managing director Tim Cooper said at he time.

“This represents the reward for 150 years of hard work in brewing by the Cooper family."

Along with being the chairman to one of Australia’s most successful beverage companies, Cooper is also the deputy chairman of the Australian Made, Australian Grown campaign group, which aims to encourage more Aussies to buy local products and make the Australian Made definitions simpler.

He does not believe the Australian-made aisle would be a big cost or time implication for the supermarkets, which already have a number of local products, but are difficult to find amongst all the other imports.

"Say, for example, it was 30-odd per cent [of floor space set aside]," he said.

"Well, supermarkets may already have that level of Australian content of food as part of their normal stock but it’s just not clearly defined as an area."

"Hopefully, enough people will get behind it to give some sort of leg up to our farmers who are, in many areas, being clobbered by imports.

"I’ve been told about a Mallee onion grower getting four cents a kilo for his crop.

"These guys are continually under pressure to match cheaper import prices."

And while most food and beverage companies are reluctant to speak up against the anti-competitive and bullying behaviours of the major supermarkets for fear of the repercussions, Cooper said he is not going to be afraid of speaking up for local industries.

"What is wrong with protecting our own industry to a certain degree?" he said.

"I don’t see anything wrong with that and most people would support it too, but our politicians, for some reason, don’t want to."

Consumer watchdog CHOICE is also behind the plan to make it easier for shoppers to buy Australian made.

"Consumers would like, where possible, to choose Australian products to support local growers," spokesperson Ingrid Just said.

"Consumers are certainly keen to understand where their food is from and it is important for that to be clearly on the label."

Contrary to the opinion of many shoppers, Cooper maintains that increasing the number of Australian made products in a shopping trip would not drive costs up.

Dick Smith has been vocal about Coles’ rejection of his Australian made and packaged fruit spreads, which it says will not sell enough to make a profit.

“Woolworths is taking the five new products, but Coles won’t, mainly on price!" he told workers at Penrith’s O-I Glass factory in February.

“Coles are letting Australians down, in this particular case.

“I couldn’t believe it.

“[It’s a] beautiful Australian product, but the minute they found out it was 20 cents dearer, their belief was ‘no.’

“If you go into Coles, and Coles have previously been good supporters of Australia, you’ll find that in their fruit spread range, from what I could see, everything is imported!

“Whereas Coles used to say when you were selling something to them ‘you’ve got to make some money, just as we’ve got to make some money,’ now they actually say ‘we don’t actually care if you go broke, we’re just going to sell the cheapest.’

Smith told Channel 7’s Sunrise program this morning that while the idea of an Australian-made aisle in supermarkets is good, he is unsure if it would work in reality.

Bega finalises 5-year private label supply deal with Coles

Bega Cheese and Coles have officially signed on the dotted line, confirming the cheese maker will supply for the supermarket giant’s private label for the next five years.

The deal was first revealed in September last year, amid controversy over the impact of private label increases on Australian food producers.

It is expected Bega will produce about 19 000 tonnes of cheese for Coles within the period.

Are you a dairy farmer? Your job is the second worst in the world

Dairy farming has been rated the second worst job in the world.

The findings of the American survey might not come as a surprise to most Australian dairy farmers, who are facing a slump in profits as the major supermarkets continue to sell milk for $1 per litre, despite a Senate Inquiry and an investigation by the Australian Competition and Consumer Commission into what the industry calls “unsustainable” prices.

Australian Dairy Association president Chris Griffin told Food Magazine earlier this year that farmers are leaving the industry in droves because they cannot manage to make a profit, or in many cases, break even.

“We know there’s been at least 30 leave the industry in Queensland alone, and the majority are sighting the uncertainty of milk prices as the reason,” he said.

Following the intense debate about the cost cutting by Coles and Woolworths and the ruling that $1 per litre was acceptable Food Magazine asked Griffin if the chances of the big two supermarkets increasing the price of milk to help with the increase in farmers’ costs would most likely be slim.

“That’s a question for Coles,” he said.

“We believe the tactic all along by Coles was just to get people through its doors, and since dairy products are in 97 per cent of consumers homes, it’s a draw card they’ve used.

“It’s always at the back end of the supermarket, so you have to walk through all the other products and displays to get to it, so it is simply a marketing ploy they’ve implemented at the expense of the dairy industry.”

When contacted by Food Magazine to find out if they would consider absorbing the cost increase, Jim Cooper from Coles said "we are not speculating about the potential impact the carbon tax will have on retail pricing."

The only profession deemed to be worse than dairy farming is being a lumberjack, according to the results collated by American HR group, CareerCast’s.

The fourth worst job is working on an oil rig, while the fifth worse is a newspaper reporter.

The best job, according to the research, is a software engineer.

The five key categories were used to determine the best and worst jobs wre physical demands, work environment, income, stress and hiring outlook.

Image: The Australian

Government report shows growth in food sector

It’s certainly not all doom and gloom in Australia’s food industry, with a government report showing a 17 per cent increase in total value in 2010/11 compared to the previous period.

Food exports are up 10 per cent from the previous year, according to the Food Statistics 2020-11 report, and are now valued at $27.1 billion.

"Australia is fortunate in being a net food exporter by a significant margin, with more than half of our food production exported to international markets," federal Agriculture Minister Joe Ludwig said.

In 2010/11, 1.68 million people were employed in the food sector, from production to food service.

It currently represents 15 per cent of total employment in Australia, an increase of two per cent on the previous year.

While the number of people employed in the sector is high, it is also a risky business to be working in, as Australian factories continue to close and companies are forced to restructure work forces to meet rising costs.

Only yesterday it was announced that 478 of Metcash employees will lose their jobs, most of them coming from the soon-to-be-closed Campbell’s Cash & Carry stores in regional Australia.

The Australian Food and Grocery Council (AFGC) want a Supermarket Ombudsman instated to oversee the impact of the supermarket price wars between Coles and Woolworths, after a report predicted 130 000 employees in the sector would be out of work by 2020.

Supermarket price wars force Metcash to slash 478 jobs

Metcash will slash 478 jobs as part of its restructure, mostly in regional Australia.

The company, which controversially took over the Franklins Supermarket chain last year, has faced difficult trading conditions, due to the high Australian dollar and supermarket duopoly of Coles and Woolworths.

Last year, in the midst of the takeover bid by Metcash, it was revealed that without a buyout Franklins would not be able to afford to keep trading past 2012.

It will close 15 Campbells Cash & Carry stores across regional Australia, resulting in 315 job cuts.

Metcash says the closures are necessary, as more customers turn to petrol and service stations instead of traditional convenience stores.

More than 160 jobs will also be cut at the corporate offices.

Chief executive Andrew Reitzer said Metcash had little choice but to slash the jobs, if it wants to remain a competitive business.

”These difficult conditions result from continued deflation which is pushing prices and margins down, and a value-conscious consumer who increasingly purchases on discount,” Reitzer said in a statement.

Shocking conditions in poultry industry revealed: report calls for changes

Poultry workers and consumers are being put at risk by increasing demands to produce cheap poultry, according to a new report.

The National Union of Workers (NUW) today released the findings of an investigation into the workplace safety practices in the poultry industry, which found “worrying signs that some of the country’s leading poultry suppliers are sacrificing safety for higher profits.”

The Better Jobs 4 Better Chicken report makes five recommendations for improving safety in the sector, across employment, labelling, housing of animals and food safety.

It says the increasing demand for cheap poultry by supermarkets and fast food chains is creating health problems for consumers.

“While the supermarkets may want Australian consumers to believe they are always buying top quality products, the NUW believes that often they are not,” the report states.

“Woolworths and Wesfarmers have flagged chicken meat as the next battleground in their ‘price war’.

“The pressure to lower costs has been passed on to suppliers, leading them to compete on
labour costs rather than reduce their own profit margins.

“Unscrupulous suppliers are then passing this pressure onto the worker on the production line.”

The companies causing the most problems for the industry are identified in the report as Coles, Woolworths and Aldi, while the worst fast food offenders are Nandos, Red Rooster, McDonald’s and KFC.

“The domination of the major supermarkets is having a detrimental impact,” the report states.
“The major purchasers of poultry meat are the supermarkets.

“They purchase around 60% of the chicken meat produced.

“The Australian grocery retail sector is highly concentrated, with only two major competitors; Coles (Wesfarmers) and Woolworths.

“These two companies control 72% of the market, which has resulted in low cost promotions and places pressure on poultry processors to lower the cost they demand for their product.”

Old chicken re-packaged and sold as "free range"

In one case study, the union found workers re-label old chickens returned by supermarkets and send them out again as new products.

One worker told researchers he often packs chickens that have been left lying on dirty floors, which are then sent off to be sold, while others have highlighted the concerning working conditions inside the factories.

“Returned tray packs are turned into kebab or marinade and sent back out,” Poultry worker Erica* says.

“I would never buy chicken from Coles or Aldi because of what I have seen.”

Some student workers report sleeping at processing facilities instead of going home, and Adelaide chicken worker, Sokhom Koey, told how he lost his job because he asked that workers doing 12-hour shifts receive breaks.

He was paid 44 cents for each chicken he deboned and was not allowed time off.

"I have a family and I want to spend more time with my family," Koey said.

"But when I have tried to take time off in the past, I have been told that if I take time off there won’t be a job for me when I come back."

Safety issues not being addressed

A recent site audit completed by NUW offi cials indicates that 20% of workers in processing are engaged through non-standard means of employment, including cash-in-hand work, sham contracting and unethical employment, the report says.

“I asked the contractor many times to be paid at the legal minimum but she said there wasn’t enough money,” Harpreet Sing, a contractor at a poultry facility in Melbourne says.

The report also provides details on accidents and deaths in poultry processing plants, as workers are often asked to clean machinery they don’t ordinarily work with.

“Baiada Poultry is not the only company to be fi ned for a death in a poultry processing plant in recent years,” the report says.

“In 2003 Ingham Enterprises was fined $20,000 for the 2001 death of 37-year-old Stirling Gerard Comey. Comey, a contract truck driver was working at Ingham’s Somerville plant when a faulty brake caused him to be crushed and killed.

“WorkSafe Victoria found Ingham’s processes were unsafe because people and trucks were not separated before and during loading and unloading.

“Once again a death occurred when an indirect employment relationship was involved.

“In December 2005, Baiada Poultry was also convicted and fined $100,000 for safety failings which led to the death of St Albans contractor, Mario Azzopardi.”

The NUW has recommended a ban on using contractors in the poultry industry, as well as the introduction of a code of conduct for workers.

To help further reduce the level of illegal contract work in the industry, the NUW also wants changes to student visa working hours and to the Migration Act.

Ingham’s commended for ethical and safe practices 

But amid the shocking stories of possible food contamination and workers safety, one company was highlighted for its commitment to safety and quality.

Ingham Enterprises is highlighted in the report as a good operator with a direct employment model, which reduces the risk of cross-contamination of raw poultry in its processing facilities.

"Ingham Enterprises is a profitable company that respects its workers and helps them find roles to suit their skills and needs," the report says.

Image: NUW Report.

Supermarket price wars will only get worse

We know food companies are too scared to criticise Coles and Woolworths at the Senate Inquiry into the anti-competitive practices by the major supermarkets.

We know that businesses and farmers are being pushed out of work by what is described as Australian food producer Dick Smith as “extreme capitalism.’

Now Coles is launching a program which many companies say is just another way it is wielding its power over them.

Adele Ferguson reports for The Sydney Morning Herald on how the new systems being put in place by the major supermarkets will continue to damage the sector.

If there is one message to come out of the fierce price war between Coles and Woolworths it is that life will get a lot tougher for their suppliers as the supermarket giants face the spectre of lower earnings growth and a potential de-rating of the sector.

Coles has introduced a program called ARC (Active Retailer Collaboration) to identify possible efficiency gains, potential cost reductions and data sharing for an upfront fee.

More than 200 suppliers have signed up to ARC agreements, but a number of them are complaining the program is anything but collaborative and is being used as a tactic to screw them further on prices. With Coles and Woolworths dominating the grocery industry with more than 70 per cent of market share, suppliers have little option but to put up or shut up.

The brutal reality is, in the past year, the food and liquor discounting between Coles and Woolworths – and more lately Metcash – has never been as ferocious and the cries from suppliers never louder.

It has refocused the debate on the concentration of Australia’s grocery industry and the long-term toll it is having on Australian suppliers.”

To read the full article, click here.


Fear campaign damaging Supermarket Senate Inquiry

The bullying behaviours and fear campaigns used by the major supermarkets to wield complete power over suppliers is still getting in the way of the Senate Inquiry into the issue.

The Australian Competition and Consumer Commission (ACCC), the Australian Food and Grocery Council (AFGC) are collaborating on the Inquiry into the anti-competitive practises of Coles and Woolworths.

The decision to take the matter to the Senate came after the dairy industry voiced its concern over the  milk price wars which resulted in both the major supermarkets selling milk for just $1 a litre, pushing farmers out of the industry as they struggled to make a living on such small payments.

Countless Australian food companies are either closing down completely or moving their operations overseas, as the influx of private-label products on supermarket shelves leaves them with two choices.

They can try to compete with the supermarkets who are able to sell similar products at ridiculously low prices because of the power they have over suppliers, but the chances of surviving, let alone making profits, are slim.

Or, if you can’t beat ‘em, join ‘em. Many Australian food companies have reluctantly agreed to cease operations as they were and instead use their factories and workforce to supply products for the supermarkets’ private label products.

But if they thought were at the mercy of the supermarkets before, they haven’t seen the worst of it until they relinquish any kind of control they had over their destiny by signing such an agreement.

Because when Coles and Woolworths decide they want to put a product on special, or they need a huge amount of a certain product, you have to deliver.

And if a company can’t deliver on time, or at the price they want to sell the product at? Too bad, Coles and Woolworths say.

“Invariably they say it is not absorbed by the grower or the manufacturer when they cut the prices but in the end it always does,” Jennifer Dowell, National Secretary of the Australian Manufacturing Workers’ Union Food Division, told Food Magazine.

“Companies can’t even transport their own stuff to Coles and Woollies!

“They transport it for you and then just bill you with their high transport prices later.

“And they won’t store stuff that is within a certain timeframe from its use-by date.

“They make the producers store it then tell them they need it within so many hours.

“So producers are in this quandary where they can’t afford to produce stuff and keep it in storage because if Coles and Woollies decide they don’t want to take it they are out of pocket.”

“They have to produce everything at such short notice so they are never able to get a long term view and a stable situation at their factory.”

Nobody willing to speak up

Dowell said the fear campaign the major supermarkets operate with makes it impossible for food companies to criticise them.

“The public doesn’t have enough information about what’s really going on in the industry.

“It’s completely ridiculous that they can’t come out and publically say ‘Coles and Woolworths are killing us’ because they just ensure that they will go out of business.

“If you publically criticise Coles and Woollies, your products will just no longer be put on the shelves, and they’re getting away with that!”

Countless food producers and farmers have discussed the impact of the supermarket dominance with Food Magazine, but almost all are too afraid to go on the record with such claims.

With Coles and Woolworths controlling 80 per cent of the grocery market in Australia, if one or both decided to stop stocking a companies’ product, it really has nowhere else to turn.

Journalists and workers in the industry are all too aware of the dire situation our food sector is in, but nobody is willing to put their name or company to the claims.

The ABC’s Lateline made over 100 calls to get comment from a food producer, and when they did find one willing, he would only speak with the promise of anonymity.

“But after more than 100 phone calls, just one Australian supplier was willing to speak to Lateline about alleged abuses of power by Coles and Woolworths as long as we agreed to hide his identity, like this, (vision shows unidentifiable silhouette of man) and even hide the kind of product he supplied,” Margot O’Neill says in the story.

“But after sleepless nights the supplier pulled out, leaving us to use only his words about why he’s so scared.

“ANONYMOUS SUPPLIER (male voiceover): "It’s quite common for the majors to stop dealing with a supplier … and suppliers to have little chance of a viable business unless they’re serving the two major supermarkets, … so it’s too big a risk to expose myself.

“But I think the power of the big supermarkets is now too large for the proper functioning of our food supply."

And while the ACCC has promised to keep all claims made to it in regards to the supermarkets confidential, few are willing to speak up, for fear they will be found out and punished.

“Without doubt there is a climate of fear when it comes to farmers and food processors speaking out about practices of the big two,” Nick Xenophon, Senate select committee food processing, told the ABC.

“When farmers and food processors tell me that they feel a bit like medieval serfs, they’re beholden to Coles and Woollies as their medieval landlords, then you know there’s something seriously wrong.”

Something has to be done

When asked if she would support a Supermarket Ombudsman, as suggested by the Australian Food and Grocery Council (AFGC), Dowell was welcoming of the idea.

“I’ll support anything at this stage!” she told Food Magazine.

“We have been talking about this for years and I’ve watched it get worse and worse.

“They own just about everything; they’ve got petrol, pharmaceutical, pokie machines and alcohol so essentially they have this massive political influence so they intervene in those areas too.”

With so much control over various industries and governments in Australia, the scary reality is that the major supermarkets may not be stoppable, at least not without specific laws and regulations to stop the behaviours.

“If we get more powers given to the ACCC, any power to an Ombudsman, and get people the ability to raise issues without losing their job, then that is a step in the right direction, because right now they cannot,” Dowell explained.

“My concern is that if we lose food sovereignty, if we lose control of our food chain we become hostage to other countries supplying our food.

“How ridiculous is that? In Australia we have the ability to produce the best food in the world, so how are we getting into this situation?

“Once these companies go, they won’t some back, they’re not going to come back and rebuild factories and businesses because Australia is upset after it basically kicked them out in the first place.

“If we rely on imports, and a country decides it is going to give its own market priority, as it very well should, what do we do? Where do we go?

“At a time when the world is saying Africa needs to have food sovereignty, we’re actually participating in a process where we won’t be able to feed our own people.

“We will be reliant on importing food.

“When we finally hit the wall and find that everything is coming from overseas and we no longer have any Australian food industries, it will be too late.”

How concerned are you about the power held by Coles and Woolworths? How do you think they can be stopped?

AFGC finalises draft legislation calling for Supermarket Ombudsman

The Australian Food and Grocery Council (AFGC) has announced it is finalising the draft submission for a Supermarket Ombudsman to be a key part of the next Federal Budget.

The peak industry body has been urging the government to instate an Ombudsman and establish a Trading Code of Conduct, to stamp out the anti-competitive, behaviours of the major supermarkets, which are pushing Australian food manufacturers and small businesses out of business.

The AFGC announced it would be starting on its draft legislation to present to the government back in January and has enlisted the help of international law firm Baker and McKenzie in its bid.

The AFGC wants the Supermarket Ombudsman to ensure Coles and Woolworths are fair and transparent in their pricing and do not push more Australian companies and industries out of business, as they have done with the dairy and fresh produce industries, among others.

The AFGC also announced last month that it would be extending its representative reach to also include small to medium enterprises.

It will be consulting all stakeholders on the draft legislation this week, before the matter is referred to the government for approval.

SPC Ardmona changing strategies to stay afloat

In response to the difficulties Australian food manufacturers face, including the supermarket price wars and the high Australian dollar, SPC Ardmona is embracing new packaging technology to reduce costs.

The iconic Australian brand has long been famous for the tins its foods, including fruits and vegetables, have always been available in.

But to keep up with the big guys – the major supermarkets – SPC had to re-evaluate how to stay afloat in the market.

"We have no choice. We have to work around the high dollar; accept that house brands are a growing reality of food retailing and lift productivity so we can absorb rising food commodity costs," Pinneri said.
The company also got a leg up in the industry when it introduced fruits in plastic containers and screw-top bottles, which provided an easier alternative to the traditional tins.

The company was losing its place in the market as, like so many other sectors, it was being pushed out by cheap imports and private label products sold at a lower price.

Last August it announced it would cut 150 jobs and close its Mooroopna manufacturing plant due to a slump in trading as a result of the strong Australian dollar.

Together with parent company Coca-Cola Amatil, it worked hard to source local ingredients for its operations, with only five per cent of its products made from foreign components, usually only used during shortages in local supply.

SPC’s exports suffered a 25 per cent slump over the last five years, largely due to the high Australian dollar.

But Pinneri pointed to the predicted 70 per cent rise in global food demand in the next 40 years as a great opportunity for food processors.

"Now we’re committed to getting out of the minor league and staying the course," he said.

"We’re getting on with investing in new opportunities in this industry.
"You’ll hopefully see a change in our products in store – what we produce will be more consumer-centric.

"We’re no longer a canned fruit business – those are Nanna’s products – we’re about new technology and product lines.”

"Well make this investment in Australia work.

"We’re commited to achieving phase one of our transformation by 2015."

The company is also examining possible plans to develop specific supermarket house brand lines.

"I take a different approach to a lot of thinking on private labels – I’d rather leverage my infrastructure by producing private label products than see them imported from somewhere else," Pinneri explained.

He also believes more cooperation between government and industry is needed if the Australian food manufacturing and packaging industries are to survive the changes to the market.

Governments need to encourage scale and capital investment, he said, to help companies lift productivity at the rates needed to compete with China.

"We must reduce the burden on local manufacturers, accelerating tax depreciation allowances on re-equiping costs and investments in carbon reduction and water saving technology," Pinneri said.