Supermarket duopoly with possibly 'too much market power' reason growers dumping veges - David Parker

Labour minister David Parker says a supermarket duopoly with possibly "too much market power" is one of the reasons produce growers are struggling to sell their product, while National's Nicola Willis is aiming blame for rising costs at the Government. 

The latest Consumer Price Index (CPI) figures released on Thursday showed annual inflation reached 6.9 percent in the year to March 2022, the highest it's been in more than 30 years. Food prices were up 6.7 percent, with fruit and vege soaring a huge 17 percent.

Speaking to AM on Thursday, Jay Clarke, the director of Woodhaven Gardens, which grows 24 different crops, said his business was facing unprecedented costs and food was going to waste due to the low price retailers are offering. 

He blamed the costs partly on international factors, like the rising price of fertiliser and fuel, but also on domestic circumstances. 

"There are also some internally driven things that come from Government policy as well," he said. "We've seen labour costs rise by about 60 percent over the last three years and that's driven by minimum wage increases and constraints on our labour market, with Government implemented COVID policies and immigration settings."

Parker, whose ministerial portfolios include Revenue and associate Finance, was on AM on Friday and said he was aware of situations where growers had to plough produce instead of selling it.  

"Wages haven't gone up by 60 percent in New Zealand, so I'm not quite sure how that number comes to be. But in respect of some of the other pressures like fuel. Yes, it is true that fuel costs are up," Parker said.

"I think there's also a market competition element here. We have an inquiry into the lack of competition in supermarkets and we're reporting on that in the next month as to what we're going to do in response to recommendations to improve competitions in supermarkets.

"There's only two buyers, big buyers of lettuces in New Zealand, the two supermarket chains and maybe they've got too much market power."

The Commerce Commission reported in March that competition in the grocery sector is "not working well for New Zealand consumers" and made a number of recommendations for the Government, such as a code of conduct for grocery supply relationships and for consideration to be given to collective bargaining by suppliers.

But it didn't go as far as suggesting the two dominant retailers were split up and a third created. The Government has made it clear there will be action and hasn't ruled out taking more drastic steps than what was recommended. 

Willis, the National deputy leader and finance spokesperson who appeared alongside Parker on Friday, said she's met with Woodhaven Gardens and been told "the Government just puts on costs without thinking about the impact that will have".

"Any extra costs they face, ultimately, they pass on to us as consumers in the supermarket," she said. "So this is really a time where the Government at every possibility should be thinking, how can we make sure we're not adding cost, we're not putting more pressure on, we're not adding red tape, we're not adding compliance because in the end, we will end up paying for that."

Asked about a 2017 HorticultureNZ report that said high quality land around urban centres was being turned into houses when growers need more land as well, Willis said New Zealand doesn't lack for land, but does have an issue around how it's used.

"What we have lack for is planning laws that allow houses to be built where we want them to be built and National has actually been very constructive and worked with the Government on reforms to the Resource Management Act to make that easier. That will mean that we can keep that productive land for fruit and vegetables."

"But I'll tell you the other thing that really matters to these growers, and that's getting workers. They look at the fact that there are 55,000 more people now on a JobSeeker benefit than when Labour came to power, and they asked themselves, why is it so hard to find people to pick the fruit and pick the vegetables? Because that's a real constraint."

Parker said unemployment was at a record-low at 3.2 percent, but agreed that more needed to be done to stop productive soils being encroached upon by too much housing. 

"One of the answers to that is you've got to have more intensive housing and growing cities and so we have worked with the National Party to pass legislation to enable more intensive housing development, both to bring down housing costs, but also to protect those highly productive soils."

Labour and National last year agreed to work together to speed up the process ensuring greater intensification policies and rules in cities. It will allow more dwellings on sections.