Poison Deviny

Classic Miranda, 2004: A striking example of what happens to supermarket prices after the competition collapses can be found in Leichhardt. Choice magazine last year found Woolworths in Leichhardt had increased prices by 23 per cent after a nearby Franklins store closed. The CPI increase for food over the same period was just 13 per cent. Woolworths told Choice its figures were wrong and the price increase at the Leichhardt outlet was closer to 18 per cent. But it admitted the price rise was “in line with the change in localised competition in the area”, which seems a fancy way to say “Franklins closed” …

Now independent service stations in NSW are bleeding, says the association’s chief executive, Ron Bowden, estimating a 30 per cent drop in revenue due to supermarket discounting. Bowden says the Federal Government and the Australian Competition and Consumer Commission, which are supposed to protect businesses from predatory pricing and abuse of market power, have been no help. “They’ve been a huge disappointment … giving big business in our industry carte blanche. They say [petrol discounting] is good for the consumer [and that] competition is a good thing and if you can’t stand the heat get out of the kitchen,” he says. “But they’re not looking at the [future] impact. These big guys can sell day after day, week after week, under cost price.” Until the competition disappears.

"With the Government and the ACCC unwilling to act, the only solution is for the public to vote with their wallets. Support your local service station, butcher, baker, grocer, fruit shop and newsagent. Once they go, they’ll never return."

After losing hundreds of thousands of dollars during the two-week picket, Baiada, the major supplier of chicken to Coles, capitulated to the National Union of Workers last week with a deal believed to include an 8 per cent wage increase, no contract staff and a doubling of redundancy entitlements. Victorian Farmers’ Federation’s poultry spokesman Mike Shaw fears further pressure on chicken farmers ahead. “We know the supermarkets have been screwing the processors,” he said last week.

When existing five-year contracts between farmers and chicken processors come up for renegotiation, he expects cutthroat bargaining which may push many farmers to the wall. He likens the situation to the one faced by the dairy industry as Coles and Woolworths slashed the price of milk to $1.

So where does that leave the consumer? With cheaper milk, staler bread, and ultimately less choice, as your favourite brands disappear and you are left with home-brands, Soviet style, and prices still rising.

It’s hardly the time for unions to be flexing their muscles.

Woolworth’s profits this year rose 5 per cent”. Those unions asking for temporary workers to get paid the same rates as permanent staff (how selfish) must be really hurting.