Are Australians paying too much for green apples?
Ahead of the first parliamentary inquiry hearing into supermarket prices on Thursday, one farming group claims that unfair practices are so widespread that the major supermarkets are even inflating the price tag of a specific variety of apple.
Michael Crisera, from the member-based Fruit Growers Victoria, said Coles and Woolworths were marking up the price on granny smith apples by well over 100%, more than double the rate of other varieties.
“They seem to do that with certain lines of fruit, including different varieties of apples and pears,” Crisera said.
“They are keeping the profit margin up.”
Markups refer to the differences between what supermarkets pay suppliers and the price they charge shoppers.
While the major supermarkets reject the organisation’s claim, Crisera said the pricing decision was likely linked to generally lower sales of granny smith apples compared to its bigger-selling counterparts, including gala and pink lady varieties.
While the supermarkets tend to sell less of the tart-tasting apple, they do so at higher profit margins according to fruit growers, which purportedly shows that retail prices are not determined by supplier costs.
A Coles spokesperson said it highly valued its relationships with farmers.
“There are many factors which contribute to the retail shelf price of produce, including transport, labour, packaging, operating and supply chain costs which are all considered when determining how we can provide the best value for customers at the checkout,” the spokesperson said.
A Woolworths spokesperson did not directly address a question on apple markups, but previously said: “We are very aware of the pressures facing many Australian families and we are working to balance the needs of our customers, our team and our suppliers in the context of economy-wide inflationary pressure.”
Once the topic area of investors and analysts, profit margins are now a community discussion point as a series of regulatory and parliamentary probes test whether the major chains are using their market share to raise prices higher than necessary.
Farming groups have accused the majors of distorting the market, leading to elevated prices for shoppers and low prices for producers.
The apple price calculations were conducted by Fruit Growers Victoria, which surveyed eight Victorian suppliers to determine wholesale prices. It then collected fortnightly pricing data from the supermarkets over the course of 2023, to compare the difference.
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The organisation’s data found that granny smith apples generally had the highest markups, followed by gala and pink lady apples.
Retail prices at the major supermarkets tended to rise and fall in unison.
The association said low buying prices of granny smith apples had affected the viability of growers, with most receiving between 50 and 60 cents a kilo, which it said was below the cost of production.
The peak national body for vegetable growers, Ausveg, said in its submission to the Senate inquiry the situation was so dire that one-third of growers had indicated they were considering walking away from their businesses.
“Furthermore, many of the tactics that supermarkets employ when they deal with suppliers may be considered manipulative and unconscionable, often resulting in significant additional costs to suppliers who already carry the vast majority of risk associated with growing and supplying produce,” Ausveg said.
The major supermarkets have consistently defended their dealings with farmers, describing many of the relationships as multi-generational.
They also describe the sector as competitive, noting the presence of Aldi, IGA, Costco, Amazon’s long-life grocery range, and numerous specialty outlets as evidence of a well-functioning market.
