Power shifts in the Australian agrifood supply chain

David McKinna

No 125330, 2011: The Supermarket Revolution in Food: Good, Bad or Ugly for the World's Farmers, Consumers and Retailers?, 14-16 August 2011 from Crawford Fund

Abstract: Over the past two years, the oligopsony of Australia’s big two supermarkets has been put under the spotlight. Woolworths was the dominant retailer, powering ahead of Coles which was lost in the haze of a dysfunctional management team and a poor business model. With the arrival of Coles’ new team from the UK, the sleeping tiger has leapt into battle to recover years of lost time. The Coles recovery strategy and Woolworths defensive response has thrown agrifood supply chains into disarray. Milk at $1 per litre, the banning of hormone growth promotants and the phasing out of caged egg production are examples of the power of supermarkets to restructure entire industries and redefine the economics of the Australian food sector. The farmers’ share of the food dollar continues to decline. Processor and value-adder margins are now below the levels needed to fund reinvestment to ensure the sustainability of these businesses. At the same time, the regulators have been reluctant to confront the issue because, fundamentally, lower grocery prices are good for consumers. Although there can be little doubt of the power and impact of the two major retailers, there are signs that new contenders are encroaching on their space. ALDI is making its presence felt and Costco has plans for further inroads into the Australian market. Both offer a totally different shopping experience. On a smaller scale, farmers markets, specialty retailers and on-line direct businesses are giving the big boys something to think about.

Keywords: Agribusiness (search for similar items in EconPapers)
Pages: 6
Date: 2011-08
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cfcp11:125330

DOI: 10.22004/ag.econ.125330

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