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A dangerous precedent: Woolworths and the ‘voluntary’ levy

I was in Woolworths last night, and proudly greeting me at the entrance was a table full of Jamie Oliver merchandise.

The national campaign wraps this week, and while ostensibly conducted to increase sales of fresh fruit and vegetables (apparently Aussie’s aren’t eating enough) it has been marred by controversy, with good reason.

Woolworths thought they would try their hand at something others had never been brazen enough to try; installing a ‘voluntary levy’ on fruit and veg growers to pay for their costly marketing blitz. Back in November last year, growers were told that recruiting star power came at a price tag, but that the campaign would be “great” for growers.

Yet this isn’t a case of a few friends splitting a dinner bill. This is a supermarket behemoth. By its own figures, Woolworths’ net profit for last financial year was $2.3 billion, and they hold 39 per cent of the grocery market in Australia.

Beyond this obvious imbalance of power, since when has it ever been a commercial norm for producers to pay the marketing costs of the sellers? And what sort of precedent is this setting for future relationships?

Of course Woolworths says it was a ‘voluntary’ levy – but even the most cursory consideration of the relationship between farmers and Woolworths tells you that would never be the case.

In an industry known for its ruthlessness, farmers don’t dare to bite the hand that feeds them. Indeed, Woolworths told a Landline report that around 100 of the 200 growers they approached paid the levy. At an additional cost of 40 cents per crate, the Jaime Oliver campaign hit the hip pocket of farmers to the tune of hundreds of thousands of dollars.

The peak body for the industry, AUSVEG, came out swinging on behalf of its 9,000 members, and said many of the farmers felt obliged to contribute to the campaign. In turn, the association has lodged a formal complaint with the Australian Competition and Consumer Commission – the result of which will be seen as a landmark decision. Beyond this, and reassuringly, Woolworths is actually already the subject of an investigation into the way it treats suppliers.

As to the ongoing David and Goliath style battle between the likes of Woolworths and their suppliers, Federal Small Business Minister Bruce Billson told me this week that the Government was working at tightening the unconscionable conduct laws, and encouraging small business to speak up about their experiences. Count that alongside a recent $100 million cash injection to the ACCC, and the extension of unfair contract protections to small business – and maybe, just maybe, the days of ‘take it or leave it’ terms could be numbered.