Food fight 'a super fruit and veg beat-up'

1/31/2012 10:54:41 AM

Tristan Harris

THE supermarket giants have been accused of mounting a phoney war as food price deflation, not discounting, delivers shoppers long-awaited relief at the checkout.

As Julia Gillard called on supermarkets to treat farmers "fairly", the retail rivals yesterday added fruit and vegetables to their arsenal of cut-price groceries.

Coles promised half-priced fruit and vegetable staples every week, extending a year-long price war over milk, bread, cereals and eggs.

But the latest Australian Bureau of Statistics data reveals that food prices have plummeted over the past three months, as farmers bounce back from the floods and cyclones that ravaged the nation's food bowls a year ago.

Fruit prices fell 13.4 per cent in the three months to December - due mainly to cheaper bananas

- while vegetables were 5 per cent cheaper at Christmas than they were in September. Woolworths yesterday reported a 5.6 per cent increase in sales from June to December, despite what it described as "significant deflation" in shelf prices.

Average prices for groceries had fallen 4.1 per cent in the three months to December, the retailer said, because of improved supply as well as "Woolworths lowering its prices to meet increasing customer demand for value".

The family-owned greengrocer Harris Farm Markets, which runs 23 stores in NSW, with seven sited outside Coles supermarkets, yesterday accused its big rival of "taking the mickey", given that fruit and vegetable prices were falling anyway.

Buying and marketing director Tristan Harris said a recent analysis of the company's 10 top-selling lines had found the prices of seven had dropped 41 per cent in a year.

He laughed at Coles's "super specials", including 98c a kilogram for pumpkin, which his customers could buy for 29c.

"Unfortunately, if the big two supermarkets come out and just make it all about price, the bigger fruit shops will succeed quite well but the little corner shops will get destroyed," he said. "The little guys can nail it on quality but sometimes struggle on price.

"Because the milk wars upset so many people and got so much air time they can say whatever they want now, just cut the price of something and its all on," he said.

"Coles will get a lot of people to hear about (their campaign), and I'm sure it will work for them. But it's pretty much a beat-up."

Food manufacturers are accusing the supermarkets of squeezing their savings from farmers and factories.

Ms Gillard yesterday called on all supermarket owners to treat farmers "fairly".

The opposition's agriculture spokesman, John Cobb, accused the supermarkets of a "marketing ploy" to lure customers.

"It is normal for fruit and vegetable prices to fluctuate throughout the year," he said.

"I expect that Coles is just trying to take credit for the normal reduction in price at the height of the season."

Independent senator Nick Xenophon said he would introduce a private member's bill to federal parliament next week to strengthen the Horticulture code of practice, which protects farmers against undue pressure from wholesalers, but not from retailers. "The inevitable consequence of the price war is it will push people off the land by devaluing their produce, and (that gap) will be filled by cheap imports," he said.

Australian Food and Grocery Council executive director Kate Carnell called for a "supermarket ombudsman" to safeguard suppliers against unfair price negotiations by the big supermarkets, which share 80 per cent of the market.

"The supermarkets are more profitable now than they have been for a number of years, so someone's paying the price," Ms Carnell said.

Woolworths is expected to match Coles's cuts but claimed that prices were falling regardless of its rival's announcement.

"The fact is there have been significantly lower fresh produce prices recently due mainly to an oversupply of stock," a Woolworths spokeswoman said.

"Our internal price checks on a basket of popular everyday fruit and vegetables shows that Woolworths prices are around 30 per cent lower than Coles."

But a Coles spokesman questioned why Woolworths had not cut its prices earlier.

"If competitors claim our prices are just a gimmick, surely there wouldn't be such a gap between the prices they were charging," he said.

Sydney student Aimee-Lee Curran, 26, yesterday welcomed any cut to the cost of living.

"You like to think you're a good, ethical person, but when you see the price difference I think a lot of us gravitate towards cheaper things," she said yesterday.

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