Monday, January 22, 2007

Woolworths: what about the other 364 days of the year?

January 22, 2007: Woolworths action "no more than a cynical marketing ploy".

In a major corporate advertising blitz, Woolworths on January 23, will "donate its entire day's profits from all Australian Woolworths supermarkets to the Country Women's Association (CWA) to help farming families with household bills and for research into sustainable farming practices."

Greens MLC Mark Parnell has called on Woolworths to do more for farmers all year round, rather than undertake a "one-day marketing-driven charity drive." There is growing concern across the country about power duopoly, Woolworths and Coles - who together control 70% of the Australian fresh food market and the control they have over the growing, distribution and sale of our food...

The General Manager of the SA Farmers Federation, Carol Vincent, describes Woolworths' National Drought Action Day as an "insulting" public relations exercise. "South Australian farmers don't want a tokenistic hand-out, they just want Woolworths to pay a fairer price for the produce they buy all year round," he said.

"The big two retailers have far and away the highest level of market dominance in the world," said Mark Parnell. "This is an incredibly unhealthy situation. Coles and Woolworths are able to exert too much influence over the size of farms, what crops are grown and what price they fetch - and as a result our farmers, and their communities, are doing it tough, drought or no drought. Because of their market power, Woolworths are in a wonderful position to make a real and lasting difference to our farmers and the wider community."

In 2006, Sunshine Coast strawberry and dairy farmers announced they were "sick and tired of being rorted by the major supermarket chains". According to the State member of Nicklin, "when I was trying to intervene on behalf of the dairy industry, I spoke to senior people in Woolworths and their response was, "we are not in the business of doing what’s good for dairy farmers, we are in the business of making profits for shareholders".

In 2006, Consumer Protection WA charged Woolworths with breaches of regulations relating to fuel pricing. Also the ACCC saw Woolies fined $7 million for anticompetitive behaviour in the liquor market. The CEO of Woolworths, a devout Christian, runs the largest liquor supplier and gaming operation in Australia - 12,000 gaming machines - as well as a major pusher of tobacco.

So far 2007 has seen Woolworths under further attack, first over grocery costs then the cost of fuel. Consumer experts say the nation’s supermarket duopoly is the reason. According to the NRMA, when it came to the cost of fuel, Woolworths are "reducing competition by squeezing independent chains out of the marketplace".

"If Woolworths are genuine about helping Australian farmers, they should stop robbing producers of the real value of their products, and start paying fairer prices 365 days of the year. Otherwise... (the) 'Drought Action Day' should be regarded as no more than a cynical marketing ploy," says Mark Parnell.

Woolworths CEO Michael Luscombe said the Woolworths National Drought Action Day is expected to raise in excess of three million dollars. He said 100% of the donation will be directed to the Country Women's Association. However, corporations like Woolworths, rarely wake up one morning, and decide it would be a good idea to dump a day’s profits into the bank accounts of organisations like the CWA. Woollies reported a billion dollar profit for 2005-6, paid its CEO $12 million, and expects 21 per cent growth.

Alan Matheson a human rights worker and christian minister says there’s a darker side to this retailing predator, which may shed some light on why Woolworths is prepared to overlook a day’s profit. "It’s farmers themselves who’ve been at the forefront of a continuing attack on Woolworths," he says. It’s farmers, and even Federal Government ministers, who see Woolies as a major threat to "the unique rural heritage of Australia". The $3 million the CWA will pick up is "peanuts compared to what is being alleged by farmers, and what the courts are saying about the friendly folks at Woolworths."

Australian fruit growers lost out as Woolworths sourced their Home Brand lines from China and South Africa in January 2006. Then Woolworths was "fined almost $9 million after being found guilty of fixing the price of bread and abusing market power". Growers complain of the "concentration of retail power", that led to grower returns getting less and less.

According to a Woolworths spokesperson, some of the donation "will be helping to put food on the tables, providing farmers with immediate support for household needs including paying bills, buying groceries and fuel." Families will be able to download applications for Woolworths funding from the CWA website starting April 1, 2006. As for the use of the remainder of the funds, the details are sketchy.

Mr De Landgrafft of the Western Australian Farmers Federation (WAFF) says it is encouraging to see farmers not having to rely solely on government handouts. "I think moves away from government assistance and back into industry... is a really good step forward," he said. "That's something that I think we haven't seen on this scale from industry, but I think that it's something [that] really needs to be done in the future."

Meanwhile, Woolworths has applied to New Zealand's competition watchdog to take over the country's largest listed retailer, The Warehouse. Michael Luscombe says the giant supermarket and retail chain may make a full takeover bid for the 85-store discount retailer.

ABC News: Drought-stricken WA farmers pleased with retail support
Courier Mail: Buy up big to assist farmers
Woolworths CEO pledges substantial - Media Release
Melbourne Indymedia
Woolworths: the farmer’s friend!
Why our farmers get so paid little yet we're forced to pay so much
On the right track, but may lack sustainable commitment
ABC News: Woolworths seeks approval to buy Warehouse

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