In short:
A small-scale banana farmer who has had his agreement with Coles ended due to the supermarket simplifying its supply chain says the move signals the end of small-scale farms across the country.
asserted
move → have → country
Industry experts have claimed Coles and Woolworths are centralising their supply chains in a bid to cut costs.
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Coles → claim → costs
Some experts worry producers will become more vulnerable if supermarkets continue to do so.
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supermarkets → worry → ?
After 30 years of selling bananas to Coles, New South Wales farmer Amrit Singh believes the supermarket's decision to stop buying his produce is signalling a possible end for small, family-run farms like his.
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decision → sell → his
In the past two months, Coles and Woolworths confirmed they would pull various local products from their shelves, with suppliers told the decisions were due to changes to the supply chain.
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decisions → confirm → chain
Industry experts have claimed major Australian supermarkets were centralising their supply chains in a bid to cut costs, warning some producers could now be at greater risk of having their products removed from supermarket shelves.
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products → claim → shelves
Woolworths said its supply chain network had expanded, while Coles rejected the experts' claims.
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Coles → say → claims
An inquiry by the Australian Competition and Consumer Commission (ACCC) into supermarkets last year found Coles and Woolworths had overwhelming power in their trade relationships with suppliers.
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Coles → find → suppliers
Local bananas dropped
In August, Coles confirmed it would stop selling Coffs Coast bananas, pumpkins and cucumbers, in an effort to simplify its supply chain.
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it → drop → chain
Mr Singh sold his bananas indirectly to Coles through a wholesaler, an agreement he said was worth hundreds of thousands of dollars a year.
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he → sell → dollars
The produce is now expected to come from north Queensland, but Mr Singh believes his business is too small to compete with north Queensland's banana industry.
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business → expect → industry
"Freight costs [involved in] getting access to those [new] markets are going to be extremely high," he said.
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he → involve → markets
Mr Singh said farmers who did not sell directly to supermarkets had "no power" to negotiate trade agreements and were forced to reduce prices to support promotions and specials.
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who → say → promotions
"That doesn't come out of [Coles'] pocket, that comes out of returns, so we actually [foot] the bill for those specials,"he said.
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we → come → specials,"he
Rise in 'middlemen' leaves farmers vulnerable
NSW
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Rise → leave → farmers
Farmers' principal economist Samuel Miller said supermarket giants had long been centralising their supply chains.
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giants → say → chains
He explained one way they were doing this was through buying produce from packhouses or "middlemen" — selling on behalf of a group of growers — instead of directly from them.
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they → explain → them
"If they can consolidate [supply] down to just a few suppliers, then it's sort of up to those suppliers to take on all of that risk,"he said.
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it → consolidate → all
"When those supermarkets make a decision like consolidating their suppliers or rejecting some produce … it affects not just that supplier in the middle, but it can affect dozens, 40 or 50 other farmers down the line.
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it → make → line
In a statement to the ABC, Coles said it continued to source directly from a range of Australian producers.
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it → say → producers
"In fresh produce, aggregators are not new and have long played an important role in Australia," a spokesperson said.
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spokesperson → play → Australia
"This model can also give smaller growers a pathway to major retailers when they may not have the scale, volume or infrastructure to supply a national network independently.
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they → give → network
"
Beef supply chains centralised
Queensland University of Technology retail marketing professor Gary Mortimer said meat was one of the main supply chains where processing had been centralised, citing Woolworths' decision to stop selling Tasmanian beef from early next year.
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processing → centralise → year
Some suppliers said they were told this was due to rising production and shipping costs.
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this → say → costs
"Over the last 10 to 15 years, what we've seen is that reduction of in-store processing back to centralised processing," Dr Mortimer said.
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Mortimer → see → processing
Dr Mortimer said some very small-scale producers could be at risk of having certain products pulled from shelves.
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products → say → shelves
Distribution centres changing over time
Coles operates 18 distribution centres around the country.
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Coles → change → country
In 2019, it operated 23.
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it → operate → 23
The ABC understands that while the number of distribution centres has declined, some have grown in capacity.
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some → understand → capacity
Woolworths operates 25 distribution centres around the country.
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Woolworths → operate → country
It was unable to provide the number it operated in 2019 but said it had added several distribution centres since 2017.
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it → provide → 2017
"We have also invested in key regional distribution centres, for example in Townsville, to strengthen food security and supply resilience in areas affected by natural disasters."
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We → invest → disasters
Coles said it had invested significantly in modernising and consolidating parts of its distribution network.
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it → say → network
"Keeping our supply chain efficient helps us absorb cost pressures which can limit impact on grocery prices."
Centralisation through own brand products
Mr Miller said another tactic used by supermarkets to centralise supply chains was introducing more own-brand products.
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tactic → keep → products
"Supermarkets [want] to really consolidate … make it as cheap as possible for them to provide those products regardless of whether or not it is best with respect to local supply chains and local growers," he said.
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he → want → chains
Last year, Coles introduced 1,600 new own-brand products, 400 more than it did in 2019.
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it → introduce → 2019
Woolworths introduced 640 new own-brand products in 2019, and last financial year brought in 445 new own-brand products along with 680 reformulated ones.
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Woolworths → introduce → ones
Dr Mortimer said this growth could be problematic for smaller producers.
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growth → say → producers
"You're not going to get your big famous national or global brands disappearing," he said.
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he → go → ?
"There is a risk that probably smaller bespoke brands that might be important in a particular town or particular area might disappear."
Coles said its own-brand range wasn't about centralising its supply chain, and the range was constantly being revised based on customer preferences.
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range → be → preferences
…and 14 more, not listed.
The Aporia