800pc mark up on veges, says survey

A Green Party survey of 121 fruit and vegetable growers released this week shows some growers reported margins of up to 800 per cent on their produce, while most suggested supermarket margins were about 100 per cent to 200 per cent

The survey has been slammed by New Zealand's two major supermarket chains - Progressive Enterprises and Foodstuffs New Zealand.The chains say the figures quoted on fresh produce margins are grossly inaccurate and do not represent gross profit margins.

Neither company would disclose gross margins of individual products, but said overall profit margins were between 4per cent (Foodstuffs) and 4.71 per cent (Progressive) before interest and tax.

"The price of a product on the supermarket shelf is made up mainly of the price we pay to our suppliers, then the costs to transport the product to our stores and the costs of paying our employees, paying the landlord, running equipment, keeping the lights on and then a retail margin," Progressive Enterprises spokesperson Luke Schepen said.

Managing Director Foodstuffs New Zealand Steve Anderson said claims of an 880 per cent mark-up were spurious.

"The results shows the blatant and deliberate use of misinformation to seize popular sentiment on an issue which is justifiably close to New Zealanders' hearts; the rising cost of living in these tough economic times," Mr Anderson said.

Green Party food spokeswoman Sue Kedgley is calling for an inquiry and for an an official supermarket watchdog to be appointed.

A supermarket code of conduct would bring a degree of transparency around how retail prices were set.

This would be good for growers as well as consumers, she said.

"Seventy-eight per cent of growers in our survey are being forced to sell their produce, at times, for less than it costs them to produce it ... more than a third had to so on a frequent basis," Ms Kedgley said.

Allegations of overall mark-ups included avocado, 880 per cent; pumpkin, 800 per cent; tomatoes, 523 per cent and kumara, 300 per cent.

Northland celery and leek grower, Robert Bradley, who also manages the Whangarei Growers Market, said produce mark-up pricing was a worldwide problem.

He endorsed a code of conduct saying Britain and Australia had already taken steps in establishing a Supermarket Code of Conduct.

Prices on the shelf were not reflective of returns to the grower.

Whangarei consumers were lucky because as well as the two supermarket chains they could also buy at the local growers market.

Horticulture New Zealand is standing behind the survey results. Spokeswoman Leigh Catley says the results are similar to one taken 12 months ago and while she accepts only a small percentage of the 3000 domestic growers were surveyed, Hort NZ were not disputing the figures.

"We see our growers as price-takers, not price-setters," she said.

Mr Schepen said Progressive Enterprises aimed to provide the lowest possible prices for customers.

"We have very good long-term relationships with suppliers and we believe we pay them a fair price " he said.

Mr Anderson said Foodstuffs had almost completed the development of its own supplier relationship guidelines.

"I support this course of action as opposed to a mandatory code being imposed on the industry, which we believe will only add costs for shoppers."

"Accusations that supermarkets make mark-ups of the nature claimed in this survey are frankly outrageous, and insult the intelligence of all consumers," said Mr Anderson.

Shopper Adam Gavin, 40, of Dargaville, felt fruit and vegetables in the supermarket needed to come down.

"The prices are extortionate. I guess the supermarkets have to allow for loss due to perishing, but there seems to be huge mark-ups on the price of fruit and vegetables."

Shopper Ray Chapman, 50, said prices were too high.

He backed the survey results and felt growers were being ripped off.