WHILE most of the world complains of rising prices for staple commodities, our food prices are apparently in a nosedive.

The move by Coles last week to basically halve the price of a range of staple fruit and vegetables has capped off an incredible and bizarre 12 months for food producers and consumers.

During that time there have been major price cuts for milk, bread, meat and now fruit and vegetables.

You can't get more staple than that.

For instance, if you bought the Sunday Herald Sun a few weeks back you got $10 off a leg of lamb.

Last weekend we saw the offer of $25 off the entire grocery bill in one promotion for Woolworths.

And this comes at a time when food is not getting any cheaper to produce, particularly owing to the "hidden" costs of employing workers and adhering to thickening red tape.

The world has gone mad in the eyes of many farmers.

It is 12 months since Coles shocked consumers and farmers when it slashed the price of milk to $1 a litre.
Until then it was about $1.80 a litre.

Dairy farmers, particularly those in northern NSW and Queensland whose milk almost entirely goes into cartons, cried blue murder.

Farmgate prices in those regions have dropped about 3c a litre in the past 12 months.

For Victorian dairy farmers, who export most of their milk in products such as powder and cheese, it hasn't been as big a deal.

The head of Australia's dairy farmers, Gippsland dairy farmer Chris Griffin, believes the retail price of milk should be pegged to the export price of milk.

That is, if a litre of milk was to be exported, then the price the farmer gets for that should be the price the farmers gets if it is sold in a carton on the supermarket shelf.

The first problem is no one actually knows how to work out the equation, such are the variable factors in exporting products.

The second is that it sounds suspiciously like farmers want an artificial floor in the price, which is a big no-no nowadays.

The third, and biggest, problem is that the two biggest retail outlets, Coles and Woolworths, will pay what they bloody well like for milk.

And if cheap milk is a major lure to get customers through the door to then pay a higher price for other products, then they will negotiate contracts with suppliers accordingly.

Brutal, but true.

The latest round of fruit and vegetable prices has been negotiated by Coles with a handful of large suppliers who are willing to take lower prices for the guarantee of a large customer who can pay the agreed price.

It is going to hurt smaller farmers and greengrocers, for sure.

Which throws up the question: What is the fair price of food?

The notion of "fair" probably doesn't come into it.

It is really just the price we are prepared to pay.

If we want assured quality and taste, perhaps even a higher ethical level of production (notwithstanding the rort that is free range), better service and packaging, we pay more.

If we are on tight budgets, we will pay less.

There is nothing new in that. It has always been thus.

But it isn't fair.

According to National Farmers Federation president Jock Laurie, consumers expect farmers to meet environmental, water, transport, worker fatigue, industrial and OH&S requirements, but then want cheaper food.

"You can't keep pushing it up at one end and driving it down at the other end," he says.

"Australian agricultural producers can't compete in our own country on the domestic market with imported product if we keep going down that path."

  • Ed Gannon is editor of The Weekly Times