Supermarket power grows in local produce markets

Press, 11 October 1988, Page 14

Supermarket power grows in local produce markets

By

SARONA IOSEFA

The growing power of supermarkets in theChristchurch produce market was emphasised at a recent conference between the Vegetable Growers’ Federation, supermarkets, auction merchants and transport firms.

The chief executive of the Vegetable Growers’ Federation, Mr Earle Rowell, said Countdown Foodmarkets stopped buying from the Timaru market, preferring to buy in Christchurch and distribute from there.

South Canterbury growers were paying transport costs to deliver produce to Christchurch markets, and a supermarket chain bought the produce to send south to shops in Otago and Southland.

This sort of supermar-

ket action and the dwindling South Island population meant southern growers were paying a lot more in transport costs to deliver their produce further to their main markets Mr Rowell said.

“The loss of the container charge, which helped growers at least regain some production costs, is an even greater blow,” Mr Rowell said. The produce manager of Super Value Supermarkets, Mr Murray McLaren, said the chain was diversifying into buying through a brokerage system rather than from the market floor.

Through the brokerage system, the chain paid a broker to find a supplier and agree to a set price for produce.

“It is a direction we have planned for G.U.S. (the parent company) to

get the knowledge brokers have of the market, and an established price that eliminates the uncertainty of the market system,” Mr McLaren said. “In the old system, the housewife could pay anything from $1.50 to twice that in one week because you just never knew whether there was going to be enough on the floor that morning, or if bad weather affected the price.

“At least, througn brokerage a set price eliminates that uncertainty and the housewife pays a consistent price right through,” Mr McLaren said.

He was adamant Super Value was not purposely undercutting the local market system. “It is a gradual process. We are still buying a lot of our produce from the

auction system, and it is a system that is working excellently. “But we are having to look at better ways of buying the basics such as cauliflower, cabbage and the like, and we have chosen the brokerage system,” he said. Mr McLaren said it would affect the market, but Super Value was not starting anything new. It was following a trend already set by North Island retail chains that used brokerage for about 50 per cent of their business. Mr McLaren said Super Value hoped eventually to set up its own distribution centre. The spokesman for Countdown Foodmarkets, another chain rumoured to be considering the brokerage system, was not available for comment.