Risk of bread shortage as chance of bakers' strike rises

There could be a shortage of bread in North Island supermarkets as bakers come to loggerheads with their employers over pay. Picture / Getty Images

There could be a shortage of bread in North Island supermarkets as negotiations between the bakers' union and the country's largest bakeries go stale.

NZ Bakers and Pastrycooks Union secretary Norm Holley said a strike was possible if members did not get a long-overdue pay bump, which had been denied them because the country's two biggest bakers and two main supermarket owners, Foodstuffs and Progressive Enterprises, continue to offer $1 loaves of bread - a price so low bakeries were unable to turn a profit.

The union is about to start negotiations with the country's second largest bakery, George Weston Foods New Zealand, whose brands include Tip Top and Ploughmans, on February 15 seeking a pay rise.

But Holley was not optimistic about the outcome and said the union and the bakery were at loggerheads over percentage pay increases.

As long as George Weston and the country's largest bakery, Goodman Fielder, continued to offer $1 loaves to the supermarkets, the industry would continue to see large-scale redundancies and a dissatisfied workforce, he said.

"They're getting slaughtered on price by the supermarkets. It's just a mess."

Should George Weston's 150 or so union members strike, about one third of the North Island's bread wouldn't be baked.

Negotiations also begin this month with Goodman Fielder, which produces Vogel's, Freyer's and Quality Bakers bread, and Holley suspected the same outcome.

The negotiations only concern North Island bakeries.

The bakery workers, who regularly did 12-hour shifts in "stinking hot", anti-social conditions, often on the minimum wage, had had a "gutsful", Holley said.

"You can't make a loaf of bread for a dollar. It's a skilled trade where the product the workers produce is being pushed down to the lowest-price article you can buy in the supermarket and each year we're losing jobs because they're having to crank up automation on these plants because they can't make any money. So, basically, they get rid of the labour force."

George Weston managing director Mark Adam said the company empathised with the union, pointing out it had been forced to slash its workforce by about 20 per cent since $1 bread was introduced at major supermarkets in 2014.

"We as suppliers do not set the retail prices, that's at the sole discretion of retailers," he said.

The consequence of $1 bread in the New Zealand market was that more than $117 million of value had been stripped from bread sales since 2014.

"In a place like New Zealand that is a significant amount of money. That was clearly very good for the consumer but not good for the suppliers of bread [because] it places pressure on the supply prices to the retailers," he said.

"So the retailers have a lot of leverage to reduce supply prices."

Adam said that when the retail price was at $1, bread was being sold for below its fundamental economic value.

George Weston was going into the upcoming negotiations with good faith and had a "very good" relationship with its unions.

"We have had no price realisation for many years in this business - we've had price deflation," he said.

"So you just have to put a line in the sand that at a certain point you can't afford to pay people anymore because there's no profitability in the baseline business."

The company had mitigation measures in place should the union strike, he said, but would not expand on what these were.

Progressive Enterprises said in a statement that its flagship supermarket Countdown was not anticipating any bread shortages and still had its in-house range of bread and buns available for customers.

The company did not comment on other businesses and how they were run.

Goodman Fielder and Foodstuffs have been approached for comment.