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Woolworths’ price-fixing will have unintended consequences

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Flat White

15 June 2022

5:13 PM

Woolworths intends to ‘price-fix’ essential items in the wake of a cost of living crisis.

With inflation set to start pushing people into the poverty line, the supermarket giant – who recently finished sacking unvaccinated staff – will keep basic pantry items at a set price.

It sounds like a great idea on the surface. As Woolworths CEO Brad Banducci said, customers will get their ‘Woolies worth’.

The money Woolworths loses in margin on these 200 products will no doubt be regained in market share. Independent supermarkets, farmers’ markets, and small sellers are not able to absorb inflation costs by fixing prices.

They will be forced to raise their prices in line with market value, at which point customers will stop coming in, taking all of their business to Woolworths. Logic suggests that large supermarket chains might be able to recoup the margin on price-fixed products through the sale of everything else that shoppers now have to buy from them with the closure of competitors.

It won’t take long for market variety to dry up leaving only the corporate giants – who were allowed to remain open and trade as ‘essential services’ while their smaller competitors were closed by government order during Covid.

Big business once again finds itself wearing the veil of virtue while benefiting from Australia’s economic woes.

Added to this, small retailers are faced with a wage rise and interest rate hike, operating like two knives straight into the backs of already traumatised retailers, many of whom lost their savings or took out loans to survive ‘two weeks to flatten the curve’ promises from government.

Primary producers have the added ‘joy’ of the New South Wales government’s ban on single-use plastics that is causing a huge expense and drama for farmers’ markets where plastic bags are being thrown away without being used at all to comply (yes, there is still plenty of single-use plastic at Woolworths). At the same time, the cost of petrol is making the transportation of fresh fruit and vegetables too expensive.

Even the price of eggs is set to rise out of control with packaging expenses, along with other pressures, causing production costs to double. Some of these include government levies which have recently come into force.

‘It is a reality that Australians are going to have to get used to paying more if they want their eggs and other food grown in Australia, or they’ll see Aussie farmers go out of business,’ said CEO of Egg Farmers of Australia, Melinda Hashimoto.

‘It’s a serious problem – if we want to continue to enjoy fresh food grown in Australia, such as Aussie eggs, then retailers, wholesalers and consumers must consider paying more to our farmers, so that they can stay afloat and maintain a future supply.’

So far, the government’s response has been to threaten the agricultural industry with green taxes and Climate Change regulation, including limitations on emissions and added bureaucratic paperwork which has been enough to make farmers abandon generational farming.

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Published by Nelle

I am interested in writing short stories for my pleasure and my family's but although I have published four family books I will not go down that path again but still want what I write out there so I will see how this goes

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