Massive vegetable markups 'crippling' growers

Vegetable growers are getting low prices for their produce - savings which aren't passed onto consumers, says Sue Kedgley. Photo / Sarah Ivey

Massive supermarket mark-ups on fruit and vegetables are crippling growers and putting their industry at risk, says Green Party food spokeswoman Sue Kedgley.

She has called for pricing practices to be investigated and a Supermarket Code of Conduct to be drawn up in light of a survey by her party of 75 growers which revealed that supermarkets put up to 500 per cent on to the cost of fresh fruit and vegetables, while growers were often forced to sell their produce for less than it cost to produce.

The survey found that only 15 per cent of growers reported that their business ran at a profit, 87 per cent were forced at times to sell produce at less than cost, and 75 per cent thought supermarket mark-ups on fresh produce were far too high.

"Our survey suggests that unfair pricing practices on the part of some supermarkets are decimating many fruit and vegetable growers and putting their industry at risk," Ms Kedgley said.

"It is simply unsustainable for growers to sell produce on a routine basis for less than the cost of production."

She said the "massive" mark-ups by New Zealand supermarkets hit both consumers and producers, as the low prices growers were getting for their produce was not being passed onto consumers.

"Serious questions need to be asked about why supermarkets put exorbitant mark-ups on fresh produce, while mark-ups on processed foods are normally around 23 per cent."

Ms Kedgley said it appeared that the two main supermarket chains, Foodstuffs and Progressive Enterprises, used their duopoly position to play growers off against each other and drive prices down to unsustainable levels.

"The government must address the huge power imbalance between two giant supermarket chains and the small-to-medium size growers that are the backbone of our horticulture industry."

Ms Kedgley said the United Kingdom had a Supermarket Code of Conduct and Ombudsman to ensure growers and consumers were treated fairly and it was clear New Zealand urgently needed one.

Tony Carter, managing director of Foodstuffs (which owns Four Square, New World and Pak N Save) told the Sunday Star Times it was "simply incorrect" to say mark-ups were 100-500 per cent but would not say what they were because it was "commercially sensitive".

Peter Smith, managing director of Progressive Enterprises (Foodtown, Woolworths, and Countdown), said pricing information was "market-sensitive and varies on a daily basis".

Commerce Minister Simon Power said he would look at the issue and would not rule out introducing a code of conduct for supermarkets.

- NZPA