AS Kiama's dairy farmers start to feel the effect of the major supermarkets' price war on milk and prices drop on meat, Coles and Woolworths have turned their attention to fruit and vegetables.
Last Wednesday, Coles cut its prices on 12 fresh fruit and vegetable items by as much as half.
Woolworths followed, undercutting or matching Coles' prices on nine products, however fresh food general manager Pat McEntree said the lower prices during the past 12 months were due to oversupply.
But despite Coles fresh produce general manager Greg Davis asserting the price drops would sell more produce and provide a more certain market for producers, Green Box Regional Food Cooperative chair Chris Presland disagreed, saying the price cuts would penalise farmers and the smaller grocery stores.
"We are all pretty fed up with the big supermarkets trying to increase their bottom line profit at the expense of local producers and growers of our food. We need to make sure farmers are paid a fair price for what they grow to ensure they continue to grow our food," he said.
"Green Box asks the grower what they want for their product - it's hard enough for growers without the extra pressure."
Green Box, which is not-for-profit, sources its produce from a 100-mile radius including small producers who sell only to the co-op and larger producers who also sell to the Sydney markets.
Mr Presland hoped with the region’s quality soil and weather, more growers would start producing crops if residents made the effort to support them.
“Consumers can make a real difference - together we can make a significant difference,” he said.
But the effects of the dairy price war and Woolworths no longer sourcing its generic brand milk from Dairy Farmers has led to a worst-case scenario for dairy farmer Mark Honey.
The lost Woolworths contract has meant only 70 per cent of Mr Honey’s milk was processed for drinking at 41 cents a litre and the excess was sold off to yoghurt or cheese companies at a tiny 22 cents a litre.
He predicted before the contract ran out in August that income could drop by 25 per cent at the very worst - it has already reached that level.
To add to the worrying situation, the 41-cent premium price was seven cents a litre less than what he received five months ago.
“It’s the pressure on the processors from the supermarkets - it was a drop imposed on us,” he said.
For now, he has been able to manage finances by milking less cows and investing in a small beef herd, but he said it was a position he would continue to monitor.
“We’ve been very fortunate in that we’ve had a good season and been able to maintain our costs, but if we get an adverse season like a drought, we’ll have to review the situation all over again,” he said.
“You’ve got to keep positive.”
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