Coles eyes fruit farm investments

16 Apr, 2015 05:03 AM
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Reduce the amount of time popular fruit and vegetables are out of season in Australia

MANGO and strawberry lovers might have reason to smile, with supermarket giant Coles flagging investments in farms to extend the selling seasons of popular produce.

Coles managing director John Durkan says it wants to make more investments to reduce the amount of time popular fruit and vegetables are out of season in Australia.

Investments in shade cloth covers for two strawberry growers in Victoria and Western Australia had extended the season, delivered better yields for the farmers, and ensured more Australian strawberries for Coles, Mr Durkan said.

"We want to see more of that," he told a food forum hosted by The Australian newspaper. "They're basically small investments but they do wonders in terms of the growing seasons for products.

"So I see plenty of opportunity for both the supply side and also for the consumer because strawberries and mangoes are impulse purchases, and actually the more products we have at the right prices the more we sell."

Coles has made a range of investments in food in recent years, through direct investments, joint ventures and supply deals, including a long-term supply deal with dairy co-op Murray Goulburn for its private-label fresh milk. Murray Goulburn's $150 million expenditure on two new processing plants in Victoria and NSW will lead to the "most productive plants" out there, he said.

Mr Durkan said Coles' policy was to buy Australian first, but "first and foremost" shoppers demanded good prices. There was no reason, for example, why the Australian canned tomatoes industry couldn't be huge, he said, but customers had to choose its products over cheaper imports.

"It does require capital, investment, innovation," he said. "And we're happy to support it, we're happy to support it to bring the prices down."

More scrutiny

Mr Durkan also played down the prospect of slower growth at Coles in the face of increased scrutiny from the competition regulator on its dealings with suppliers, which have suffered lowered margins in past few years.

Coles has had two high-profile court battles with the Australian Competition and Consumer Commission in the past four months.

Last week, it was fined $2.5 million and ordered to pay costs after breaking Australian consumer law by falsely advertising bread products as "freshly baked" and "baked today".

In December, it agreed to pay $10 million in penalties and review contracts with hundreds of suppliers after admitting to 15 instances of unconscionable conduct against eight suppliers.

But Mr Durkan said "for all the talk that there are only two operators in Australia", meaning Woolworths and Coles, "there are plenty of people operating in the retail sector in Australia, so there's plenty of opportunity for everyone."

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READER COMMENTS

farmed
16/04/2015 8:25:14 AM

i'm sure durkan has done the figures and coles are making a nice dollar for its small investment. cant see the farmer being any better off in the end.
Percy
16/04/2015 7:45:20 PM

This is called "Vertical Intergration". Cut out the middle-man then cut out the producer. Worked well in the pig industry except all the small farmers could no longer either compete or get a foot in the door so went broke just like the corner store.
pepper
27/04/2015 10:00:42 PM

You are spot on Percy, this has also happened in the so called beef industry, small crops, etc..... except that they haven't cut anyone out rather eliminated the competition. Wake up ACCC small business is being destroyed in this country by your short term perspectives and inability to see beyond corporate canvasing.

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