Duopoly mark up on avocados…590%??

People are concerned about the supermarket duopoly. FYI we pass on the Get Farming report on Coles and Woolworths applying a 590% mark up on avocados.

www.getfarming.com.au is a farming and business info and referral service, part of the Rural Media publishing group. Read on and see what’s happening in the avocado market.

‘Get Farming’ says:

“Australian growers are having their biggest season ever this year, which has meant wholesale prices have been the lowest in the last 10 years.

The Australian industry this year has produced 20% more avocados than ever before. Growers have been receiving on average just 50 cents per avocado. At 50 cents each, avocado growers are just able to pay the cost of producing their fruit.

“Coles and Woolworths are charging consumers up to $2.95 per avocado at retail, explained Mr Antony Allen, Chief Executive Officer of Avocados Australia. That equates to a mark up of up to 590% on the average wholesale price”.

The two main supermarket chains have been applying ‘see saw’ pricing in their stores. One week the ‘special’ price will be around 80 cents per avocado in one State, the next week the price goes up and depending on the store it can be as much as $2.95 per avocado. The wholesale price remains unchanged during the retail “see saw” cycle.

“The industry needs to work with the supermarket chains to ensure consumers receive good quality, market priced avocados which will ensure all parts of the avocado supply chain remain viable and sustainable into the future”, said Mr Allen.

Market forces are just not working when 50% of avocados are sold through just two large supermarket chains and they control the price setting at both wholesale and retail level.

Consumers will be thinking avocados are expensive due to drought conditions in parts of Australia, when in reality they are in plentiful supply. Australian growers just want consumers to have access to what is the most nutritious fruit in the world at a fair and reasonable price.

“Surely this is a matter for the ACCC?” asks Mr Henry Kwaczynski Chairman of Avocados Australia. We can’t see any other solution but for the consumer watch dog to look into this matter, as market forces are not working in the way they should.”

When the market is not working in a transparent way, the flow on effect is enormous and has long term impacts on both consumers and growers.

Not only does the high retail price mean a huge profit for Coles and Woolworths, but it is having a negative effect on avocado quality in stores. Reduction in quality has come about due to avocados moving through the supply chain more slowly, resulting in more storage issues.”

If you know specifics of instances like this, please let us know.