National Farmers' Federation

Supermarkets gouge growers millions in rebates alone

The Senate Select Committee on Supermarket Prices continues its hearings in Melbourne today, having heard repeated incidences of poor – if not unconscionable – behaviour by supermarkets from consumers and growers alike in Hobart and yesterday in Orange. 
Chair of the NFF Horticulture Council Jolyon Burnett said evidence and testimony from growers and industry representatives had already painted a bleak picture of the unbalanced trading relationship between major supermarkets and fresh produce suppliers.
“What should now be clear to the Committee and anyone following these proceedings, is that the rock-bottom prices offered by supermarkets is just one of the many ways they’re extracting maximum value out of Australian farmers and regional communities,” Mr Burnett said. 
“One of the most common and problematic ways growers are gouged is through rebates, a type of supermarket tax where suppliers incur a deduction of between 2.5 and 5 percent on their final payment. 
“Unlike a tax raised by government, rebates are too often opaque and arbitrary with little transparency from a supermarket on how they’re calculated and then spent or what direct value suppliers get in return.

“In some instances, rebates are levied on suppliers for simply getting paid within a reasonable timeframe. Many levies are inserted into agreements at the start of a trading relationship and never revisited.  
“Supermarkets are likely gouging growers annually tens of millions through rebates. We can only assume this falls straight through to their billion-dollar bottom lines. 
In 2015, Coles refunded suppliers $12 million having been found by the Federal Court to have engaged in unconscionable conduct related to the 2011 roll out of a rebate program that growers were pressured to accept and which delivered no obvious benefit.

“Unfortunately, we have little confidence rebates put in place since are any better, considering the serious cash recouped by supermarkets, the non-existent oversight of these arrangements by regulators, and the relatively minor repercussions when shown to be unconscionable. 
“The Council and its members expect the Senate Committee, and separately the ACCC in their own inquiry, to apply serious scrutiny to supermarket rebates,” Mr Burnett said. 
“If supermarkets can’t assure the Senate Committee, the ACCC and especially their own suppliers that they’re using rebates fairly, then they shouldn’t be able to use them at all.”