Bruce Billson’s food for thought on supermarket wars

Minister for Small Business Bruce Billson has flagged cuts to red tape and incentives for research and development at a speech to food retailers in Canberra today.

In the address to the Australian Food and Grocery Council Industry Leaders Forum at Parliament House, Billson foreshadowed bolstering anti-dumping measures and said the Abbott government would make the Department of Industry responsible for anti-dumping regulation.

Billson reaffirmed the government’s aim to introduce a bill to repeal carbon pricing in November.

And the supermarket duopoly of Coles and Woolworths was in the gun.

He said “intensified competition between the two major chains has reduced grocery retail prices, and there are concerns that those reductions come at the expense of suppliers and impact on the longer term durable benefit to consumers”.

“We have to ask ourselves: will these price and market pressures impact on the viability of the food and grocery industry over the long term, and will they stifle innovation and investment by suppliers? And will this result in higher grocery prices in the longer term?”

Billson said a root-and-branch reform push by the government “presents a great opportunity for identifying areas where reforms could deliver more competitive markets and drive productivity”.

He gave the speech, which SmartCompany has seen in draft form, as the Food and Grocery Council reported their industry’s trade deficit improving from a $2.8 billion in 2011-12 to $2.2 billion in 2012-13.

The FGC today released its report on the state of the industry, which states 67% of its members reported they couldn’t pass on to customers a 5% increase in operating costs due to carbon pricing, according to a survey.

The report states 1071 jobs had been shed and members were spending big on capital expenditure – a 22.9% growth to $3.1 billion in the food, beverage and tobacco manufacturing industry in 2011-12, and a 26.5% increase in capital expenditure in food product manufacturing. The report states this was due to “investment in productivity initiatives such as automation and other cost-reduction programs”.

Australian Competition and Consumer Commission chairman Rod Sims said a new priority for the commission was to investigate the credence of claims “particularly those in the food industry” when he spoke at the event.  

He highlighted a proposed crackdown on claims made on free-range egg packaging. 

Sims reaffirmed the role of regulation in the market economy. “We see merit in the introduction of a legally enforceable supermarket and grocery industry code of conduct with clear and real obligations to allow the ACCC and industry to know when traders have crossed the line,” he said.

He said results would be delivered in early 2014 from an investigation of allegations supermarket chains “misused their powers” to sell their home brands, and whether they engaged in “unconscionable conduct” in dealing with suppliers.