7 Jul 2022

Grocery Commissioner: New role won't mean sudden price drops - Vegetable NZ

10:04 am on 7 July 2022

The introduction of a Grocery Commissioner won't result in a sudden price drop for consumers, a vegetable grower representative says.

Woman is going to use contactless means of payment in supermarket. Close up of female hands holding necessary cash equipment

Photo: 123RF

The new role announced on Wednesday would be part of the Commerce Commission, and act as a watchdog for the supermarket industry, providing annual reviews of sector competition to hold it to account.

"I think it should be a good backstop but we really need to see if it deals with fundamental issues of producers getting a fair return for investment and effort," Vegetables New Zealand chair John Murphy said.

He said the price paid to growers had not increased in almost a decade.

"You've still got similar prices on in-season vegetables that were there ten years ago."

"Ultimately consumers are the ones that foot the bill, but the supply chain is very long.

There would be no sudden fall in prices to consumers as a result of these changes, he said. "But you would imagine given more transparency to the market that supply and demand should work in other areas of the supply chain, and that has got to be good for New Zealanders."

Commerce and Consumer Affairs Minister David Clark

Consumer Affairs Minister David Clark said the Commissioner could issue fines. Photo: RNZ / Angus Dreaver

"Ultimately vegetable growers are paid based on supply and demand and the question is whether the rest of the market operates in that way appropriately or not," Murphy said.

The commissioner would have the ability to issue warnings, and put fines in place when code of conduct breaches had been established, which may be a percentage of turnover, Commerce and Consumer Affairs Minister David Clark said. They would be able to go to the courts and seek that contracts be overruled.

Consumer New Zealand chief executive Jon Duffy said the Grocery Commissioner's powers had to be be strong enough to handle an "entrenched and determined duopoly used to playing hardball".

The commissioner had to have the "mana and the backbone" to regulate the industry, be supported through legislation and have appropriate resourcing.

The government had moved quickly, there was a solid analysis by the Commerce Commission, industry players on the supply side seemed supportive, and supermarket say they are keen to cooperate, he said, but the devil was in the detail.

"Everything is set up to make this work, we just need to deliver on it."

A code of conduct would regulate interactions between suppliers and supermarkets, and if set up correctly and suppliers had the confidence to use it, that system should work, Duffy said.

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