Vegetable growers alert ‘unethical’ business deals with supermarkets, claim one in 10 farmers losing $50m annually

Millions of dollars worth of fresh vegetables are going to waste each year due to supermarkets over ordering and rejecting farmer stock, with industry groups raising the alarm over “manipulative” non-binding supply deals.

According to Australian fresh produce suppliers, farmers are losing up to $50 million annually due to supermarkets over-estimating their stock inventory.

In a submission to a federal Senate inquiry into supermarket prices, peak industry body AUSVEG said one in five growers are losing more than 30 per cent of edible produce through self-rejection.

“One in five farmers report that rejected produce is given to supermarkets for free, and one in four stated that supermarkets expect imperfect produce for free,” AUSVEG said in its submission.

“Therefore, rejection of produce could also be a method for retailers to manipulate growers into providing low-cost or free produce, while still setting high retail prices.”

According to the industry group vegetables growers are entering into “non-binding” agreements with supermarkets where retailers set a forecast weekly volume of stock, with no obligation to accept the full amount. It said that a significant majority of growers report that supermarkets are rejecting a considerable portion of supply, with sometimes as little as 50 per cent of produce appearing on the shelves.

The practice is forcing farmers to either plough their surplus crop back into the soil or sell it on the wholesale market for a cheaper price.

“Retailers, who actively monitor prices in the wholesale market and buy from market agents, then advise the grower that the wholesale price is low, and therefore put pressure on the grower to accept lower prices,” the AUSVEG submission said.

“Are the retailers deliberately manipulating the market and causing an oversupply through over-inflated supply agreements?”

AUSVEG said that the financial situation was so “dire” that about 34 per cent of growers were considering exiting the farming business.

It comes as farmers and fruit growers prepare to give evidence on the price-setting practices and market power of major supermarkets at a hearing in Melbourne on Wednesday.