Fragile Food System

Monday, 22 February 2010 08:19

Under the veneer of bulging supermarket shelves of fruit and vegetables in Australian, there is a growing fragility the industry doesn't want to talk about.

At present, about 80% of all fruit and vegetables in Australia are sold through supermarkets and only two businesses have the lion's share of that trade. As such, these businesses have incredible market power. This power not only impacts the quality, freshness and price of fruit and vegies for the consumer, but it is having a profound affect on the medium term viability of our food supply chain.

It's a basic rule of our sometimes destructive economic system that competition encourages predatory power by big players. This is a "free" market at work, serving short term profit interests. This power is usually exercised at the expense of other participants in the supply chain, a "dog eat dog game".

Well, once the big dogs in the game have cannibalised the smaller players, how can it continue and where does our food come from? Here are some points to consider:

1. Transport companies are striking because their increased freight costs are often excluded from their transport contracts to supermarkets. So do the transporters have to continue striking before they get a fair deal or do they just go broke and the supermarkets establish their own freight companies, thus leading to greater monopoly control? Whichever way it goes, because we have become so wedded to consuming food that has travelled long distances, food prices will go up significantly under the current system.

2. The Australian supermarket food system has become divorced from the concept of selling locally grown food in season. The system is dependant on long distance transport and lengthy cold storage or preservation methods. This is driven by the notion created in consumers that it is OK to consume all types of fruit and veg at any time of the year. This notion comes at a hidden cost. Fruit and vegies, despite looking plump, are neither fresh nor nutritious, as nutritional value is greatly affected by freshness and transport/storage costs make a large proportion of food prices.

3. The food supply chain contributes approximately 30% of Australia's carbon emissions. Carbon emissions from transport and storage are a significant and increasing portion of this. When carbon trading comes in and businesses are penalised for carbon emissions, the costs will be transferred to consumers. Ultimately this is supposed to lead to a change in behaviour of businesses supplying food, but because of the monopoly market dynamics in Australia, this will be very challenging and consumers will bear the cost.

4. The economic viability of fruit and vegetable growers has been on the downhill slide for a number of years now. Up to 70% of Australia's farmers are heavily in debt and their average age is 61 years. Attracting young people to the industry is getting harder by the year because there is "no money in it". This seems a crazy proposition when the mark-up of most fruit and vegetables from grower to consumer along the current supply chain can be up to 10 times.

5. Farmers are being "screwed" because of centralisation of power in the market and the huge amount of costs, pushed down to them in lower farm gate prices, which are built into food prices because of long distance transport and lengthy cold storage.

6. Without viable food growers in our country, there is no supply chain to the supermarkets. The big guys have also found a way of temporarily getting around this problem by importing food, such as garlic from China or oranges from Brazil, when they in glut in those countries and out of season in Australia. Transport costs are huge in this case and food is never fresh.

It all sounds very gloomy and if we keep going along the same path, a train wreck is approaching, but there is a solution and it doesn't have to exclude supermarkets. That solution is beginning to spread in other parts of the world, but it will be very challenging in Australia because of the incredible centralisation of power in the fruit and vegetable supply chain.

The solution includes the following key components:

1. Big focus on growing your own food and urban agriculture - Backyard food gardens, community gardens, allotment gardens and peri-urban small scale growers are popping up everywhere. The food is always fresh, cost is not an issue, you consume carbon by doing it and growing food is a healthy pursuit.

2. Strengthening consumer demand for eating locally grown in-season food - This is a very powerful market dynamic which consumers are driving, but they must be genuinely shown that food is fresh and in season. Rapidly growing patronage to local farmers markets is evidence of this.

3. Provision of support for farmers - The growing transition to more sustainable organic farming practices, fairer allocation of margins and more local selling will increase the number of farmers, improve the quality of their product and their long term viability.

These three factors can help to redeem the dysfunction in the Australian fruit and vegetable supply chain and hand more control back to the consumer and grower. They can open whole new horizons of food supply and distribution. Who knows, perhaps the supermarkets may wake up from their myopia and start selling locally grown food in-season. They can make good money from it after all, while the Australian growers stay viable and we get genuine fresh, nutritious food. The solution is blossoming right in front of us, but can only be driven by us, not Government nor big corporates, but you and me.

Author - Peter Kearney, This e-mail address is being protected from spambots. You need JavaScript enabled to view it
www.cityfoodgrowers.com.au