Lower prices cause grape divide for Australian growers
The rising proliferation of bulk grape programs in Central Queensland caused headaches for growers further south this season, according to Australian Table Grape Association (ATGA) chairman Richard Lomman.
Lomman, who grows branded grapes in St George in the state's south, told www.freshfruitportal.com the buying practices of supermarkets Woolworths and Coles were hurting farmers, with many consumers missing out on quality as a result.
"Talking to people in the supermarket chains, even they are of the assumption that as the dollar is so high export markets are going to be almost impossible to access, but it's almost the reverse," he said.
"Growers are getting really good money in export, between AUD$24-30 (US$25.17-31.47) for a good line, which no one thought would be possible considering the value of the Aussie dollar.
"Unfortunately the consumers are probably the ones who are suffering but they’re not able to see what’s on offer because that premium fruit now is going to China. They’re getting the quality that the Australian consumers should get."
While attributing part of this export success to the growing middle classes in Asia, Lomman said local market prices had been driven down by volume-oriented vineyards and a lack of seasonal purchasing from retailers.
"The early area had an enormous year in yields so that fruit obviously didn't have a home because it was way over what the demand was for that period, so that fruit was stored and then sent on to the market over the next two months; a product that's normally sold in November and December was still sold on the shelves in February.
Early production impacts
He said growers in the Central Queensland area of Emerald had historically experienced low yields but had increased planting significantly.
"So if they work out how to get normal yields on the area that they’ve got and they're still expanding, there’s a chance that it could become more the norm than an anomaly."
He said these early growers had a different cost structure to their counterparts in growing regions like St George, Munduberra and Mildura.
"They're supplying product in bulk quantities, the spec is right on the line or even a bit below, so they're picking a much larger percentage of their product.
"They're not doing as much to it as a smaller grower would do to try and get a more premium line, and so their costs per box are probably three or four dollars less than a normal grower would be, which is the difference between surviving and not surviving."
In light of this difficult season, which could get tougher next year as many growers are only covering costs now, Lomman encouraged supermarkets to take on seasonal buying practices to help the lot of growers and improve quality.
"Woolworths have told us that they do have a seasonal policy, that they won't buy from a previous growing area if a new growing area comes online in the normal season.
"Coles have told us they do not have that policy, but if Woolworths go that way we’ll certainly be supporting them because that’s the way it should be. By allowing stored fruit to come into the marketplace another two months after your season's finished, all it's doing is encouraging those guys to expand more."
He says the returns from premium grapes and second line grapes are like "chalk and cheese", and with prices as low as they are, "sometimes it’s not even worth selling the second line because you’re picking it and it's actually costing you money".
He said supermarkets highlighted Emerald grapes growers were doing okay on average.
"This means they’re getting really good prices early, they’re getting average prices for their mid-season and then their later stuff they’re basically dumping, which to me doesn’t make good business sense.
"What’s obviously happening is they’re trying to buy or maintain their market share within that buying group to either Woolworths or Coles, and they’re happy to take a loss for that later bit just to maintain their supply, because if they don’t supply it then they’ll go to another grower and that’s more competition.
"We certainly understand from a Coles and Woolworths perspective that you don’t want to be buying of 100 growers when you can buy off a handful. I think the solution is that they both adopt a seasonal policy."