Fruit and vegies: why do they cost so much, and who gets what?

Date
    January 17, 2016
    WA Today

If you've ever wondered how much the farmer gets for the fruit you're holding in your hand, orange growers want to tell you this summer they're getting very little or nothing at all.

A survey of the supply chain for six fresh foods found that shops get as high as a 76 per cent share of the final price while growers, especially of oranges and apples, feel the squeeze.   

Valencia orange grower Tania Chapman said she is getting 25¢ per kilogram, which barely cover her rising production costs. Others are getting as low as 17¢/kg and losing money.


"We're doing it tough. The cost of production is going through the roof, with fertilisers, with fuel, but our returns are going backwards," she said.

"The wholesalers are always going to make money, the retailer always get the biggest chunk. The prices are not changing at the shops, but the prices paid to us are going down."

Fairfax Media found the juicing oranges at three greengrocers for an average $3.82/kg, meaning, based on current wholesale prices, retailers were claiming about 65 per cent of the final price.
The prices of fruit and vegetables are determined by a basket of factors, with growers often getting only a small share of the retail price.

The prices of fruit and vegetables are determined by a basket of factors, with growers often getting only a small share of the retail price. Photo: Edwina Pickles

For granny smith apples, the wholesale price is $1.92/kg, compared with $4.82/kg at the shops, meaning retailers held a 60 per cent share of the retail price.

John Dollisson, chief executive of Apple and Pear Australia, said the average farm-gate price for all apple varieties last year was $2.57/kg while the retail price was $4.20/kg.

In terms of profitability, 2015 was one of the worst years on record, with some growers – like some of the valencia growers – unable to cover production costs, he said.

"We want to work with retailers much more closely to develop strategies that ensure a fair share of profits to both growers and retailers and, importantly, a fair price for consumers," he said.

Food market analyst Steve Spencer, of Freshagenda, warned against comparing farm-gate and retail prices, saying margins along the supply chain varied, especially for fruit, depending on the season and supply and demand.

The final shop price was largely based on affordability – what consumers were willing to pay. For common fruit, that typically hovered between $3 and $4 a kilogram, he said.

"Sure, there are growing costs, in some cases ripening costs, transport fees, some sort of market and distribution costs to a point of sale. It varies over the year depending on the volume of the fruit," he said.

"Vegetables prices are more stable because they typically have a shorter production, so it's easier for supply to be flattened out. They're reliably available for most of the year."

The supply chain survey found the greatest profit margins were in vegetables and herbs, with both a single continental cucumber and a coriander bunch selling for 50¢ wholesale and about $2 at the shops.

A Queensland cucumber grower said an oversupply in the past three to four months left many struggling to sell them for a healthy profit. Cheap prices meant consumers were the winners, he said.

Linda Snart, owner of Village Herb Farm which supplies the major supermarkets, said the real cost of producing fresh food was not reflected in the price consumers pay.

Production costs including irrigation, water and refrigeration, as well as freight and distribution costs, were large factors in determining the price of produce, but more so is the cost of labour along the supply chain, she said.

"It's a huge convenience to go up to a supermarket and be able to buy all [your produce] under one roof. Everything comes with a price," she said.

A bunch of three baby bok choys was 75¢ wholesale and $1.84 at retail, meaning shops were claiming a 59 per cent share of the shelf price.

A kilogram of button mushrooms was $6.50 wholesale and $12.15 at retail, meaning shops had a 47 per cent share.

Chris Cope, of the Sydney Market Reporting Service, which collects wholesale prices, said some growers, especially from the Sydney basin, bypassed merchants and sold their produce direct to retailers, getting a bigger slice of the price pie.

He also revealed two major mushroom growers shut down over the past year because they were not making any money. The sudden dip in supply saw mushroom wholesale prices peak, but it had since stabilised.

"The prices went through the roof about eight months ago. We hadn't seen prices like that for a long, long time, but it's stable at $6.50 now," he said.

Try growing them yourself then.

it ain't that easy.

Another problem created by leftards

How you might ask?

Labor spent $15B+ on illegals in it's 6 years of government. In 2016 Australia is still paying for the ALP and Greens stupidity. Compare this to $200M by the Howard government.

This money could have been used on helping our farmers

Quote:



did they mention PENALTY RATES?

only the poor bastard that grows the things doesnt get penalty rates.

I was initially upset at how high priced fruit was in the shops.
When I first started growing fruit the shop price was double my gate price.
Then over about 20 years the mark up went to about 600%

Then I worked out that I should sell the fruit direct to MY customers and things were going very well.
The higher the shop price the better.

I always maintained that growers should grow less fruit and sell more fruit,, that is spend time on the selling direct.

The article doesn't seem to take into account the cost of running a supermarket, which would surely account for some of the mark-up.

Wolseley wrote on Jan 20^th, 2016 at 7:33pm:


yes, rents, wages, advertising.
It is big outgoings before you buy any stock.

miketrees wrote on Jan 20^th, 2016 at 8:10pm:


I have troubles growing almost anything.
Any tips?