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Cheap fruit leaving a sour taste in farmers’ mouths

AS COLES and Woolworths battle it out for their market share and the price of fresh produce gets cheaper and cheaper, consumers are cheering.

But if you knew the true value of that piece of fruit, would you pay more?

Graeme Butler is a sixth generation farmer who owns Butler Orchards in rural Victoria, that produces stone fruit — predominantly peaches and nectarines. In a good year this fruit has a four-month season, which gives him four months to make his entire year’s income.

Everything involved in preparing the orchard for each season is labour intensive and the cost of bringing the fruit to market is getting more and more expensive.

“Our outgoings as a whole have increased approximately 40 per cent over the last 10 years,” Mr Butler says. “This includes things like, freight, wages and superannuation, packaging, water, rates, fertilisation and farm equipment.”

The list goes on. The only thing that hasn’t increased is the price the farmers are getting for their fruit. “We’re getting the same prices now as we were getting 15 years ago,” he says.

Mr Butler explains how he believes the big supermarket chains are responsible for keeping the price of fruit stagnant.

“Supermarkets have contracted suppliers that are more of an external packing shed. They do grow some of their own fruit but can’t grow enough to supply the supermarkets, so they purchase fruit from smaller producers and package the fruit with their own label.”

“This means the smaller farmers no longer have the overheads of running their own packing shed, but because the supermarkets ask for a particular size of fruit — generally the most popular sizes in the middle range — that is the only size fruit these external sheds will buy from the farmers, leaving producers with a glut of fruit sizes that are not deemed popular and therefore hard to sell.”

Mr Butler is realistic about the future of fruit farming. He knows large packing sheds are the way of the future. However, he doesn’t see it as a financial solution for the market.


“The external packing sheds will struggle eventually too if the price of fruit doesn’t increase,” he says.

“They too are managing increases in their outgoings and smaller producers won’t be able to continue to supply to them for such small margins, so it will end up being cheaper to just leave the fruit on the trees.”

But packing sheds aren’t the only problem. Supermarkets also import stone fruit from the United States before the Australian season starts. So “by the time our fruit is in season, the novelty has worn off and the customer’s expectation on price has been set by an overseas market,” Graeme says.

For now, the greatest margin for Mr Butler is the fruit he exports to countries like China.

“Our export market offers the greatest margin, however the quality control is stringent and we have to jump through hoops to meet our export requirements,” he says.

This leads to a lot of waste in produce when fruit with small marks are not accepted. This is where Mr Butler believes it would be helpful if Australian food manufacturers would consider sourcing their fruit locally, buying seconds from the Australian market rather than importing produce for their processed foods. “I believe selling our seconds locally to Australian food manufacturers could be a good solution for both farmers and the Australian food industry,” he says.

There is no way to avoid the major supermarkets, we are all busy and we need the convenience they offer. But ask any farmer and they’ll argue that having the monopoly in a market shouldn’t excuse poor practice.

The solution? It’s simple, says Mr Butler. “The prices for our fruit need to increase to be in line with the increase in our outgoings.”

Source: http://www.news.com.au/finance/business/retail/cheap-fruit-leaving-a-sour-taste-in-farmers-mouths/news-story/226c2233673570244ecc525854a5b515