One-Third of Growers Prepared to Exit the Farming Sector, According to Farming Group

One-Third of Growers Prepared to Exit the Farming Sector, According to Farming Group

Australia’s farming sector is facing a major crisis as over a third of vegetable producers are contemplating leaving the industry, potentially making the country a net importer of fresh food. A recent survey conducted by AUSVEG, Australia’s leading horticultural body, revealed that 37 percent of vegetable growers expressed their intention to exit the sector next year. While there are multiple reasons behind this trend, one of the key drivers identified by AUSVEG is the “manipulative and unconscionable” tactics of supermarket retailers.

AUSVEG blames the imbalance of power between vegetable producers and supermarket retailers for making it increasingly unviable for farming businesses to continue operating. The organization highlights that the prices being paid by supermarkets for Australian-grown vegetables are not sufficient to sustain the operations of many farmers. In fact, 78 percent of retail fresh vegetables are sold through Coles, Woolworths, and Aldi, and their dominant position in the market allows them to dictate prices. This flawed relationship has created an environment where growers fear commercial retribution if they raise any concerns with the retailers or other relevant authorities.

Not only do supermarket retailers control pricing, but AUSVEG also accuses them of devaluing fresh produce by using it as “clickbait” to attract customers into their stores. Lucy Gregg, AUSVEG General Manager Public Affairs, cites the example of farmers selling broccoli for $4.50 while supermarkets sell it for $2.90. She urges retailers to treat fresh produce with the respect it deserves and to stop using it as a mere marketing tool.

To tackle these issues, AUSVEG proposes the introduction of a “code of behavior” that would regulate promotions and ensure that retailers act responsibly and in the best interest of the fresh produce sector. While much of the focus has been on supermarket prices, some commentators argue that the problem is more complex than that. Graham Young of the Australian Institute of Progress points out that supermarket profits are actually quite low, with after-tax profit margins ranging from 2.53 percent to 2.57 percent. This means that supermarkets have limited room to lower prices without going out of business.

However, the challenges facing the farming sector go beyond just supermarket prices. The farmers themselves acknowledge that the current economic environment and various external factors are contributing to their struggles. Australia is heavily reliant on imports, which exposes the country to differing food quality standards and various costs associated with everyday goods. CEO of AUSVEG Michael Coote also highlights demographic issues, with the average age of farmers being close to mid-60s. Without a new generation of farmers to take over, there is a limited opportunity for new entrants in the market.

The long-term outlook for Australia’s food bowl is not promising, as the farming sector faces multiple challenges and uncertainties. It is crucial for policymakers, retailers, and industry bodies to come together to find sustainable solutions that ensure the viability of the farming sector. Otherwise, Australia risks becoming overly dependent on imported food and losing the expertise of experienced farmers who have dedicated their lives to feeding the nation.