Woolworths: the farmer’s friend!

On January 23, 2006, the profits of all Woolworth’s supermarkets will be handed over to the Country Women’s Association (CWA), to assist farmers affected by the drought, and for research into sustainable farming practices. As a result the CWA can expect about $3 million to land in their bank account by the end of the week.

Unless we all act now, according to the current Woolworth’s CEO, “the unique rural heritage of Australia will be under threat”. Woolworth’s, he said, recognises “the financial hardships faced by rural families and the longer term viability of the industry in a changing and unpredictable climate”.

Yet another sympathetic, supportive and generous gesture from the friendly folks at Woolworths!

For sheer front and audacity it’s a publicity stunt like no other: and how the CWA and Christian activists around the land fell for it is mind boggling.

According to the national CWA president, “this initiative, gives us hope now and for the future of Australian farming”. The good country folk of Maleny, currently boycotting Woolworths in their district, will be tearing up their CWA membership cards. Church leaders, failing to deliver low pressure systems on their national day of prayer for rain, will welcome Woolies profits as an alternative.

Corporations like Woolworths, rarely wake up one morning, and decide it would be a good idea to dump a day’s profits into the bank accounts of organisations like the CWA.

Last year was not a good year for the company and its not looking much better for 2007. True, it reported a billion dollar profit for 2005-6, it was able to pay its CEO about $12 million, and it expects a further 21 per cent growth in 2006. With Christmas sales delivering nearly $3 billion, it’s well on track to meet this forecast.

But there’s a darker side to this retailing predator, which sheds some light on why, at this time of the year, Woolworths is prepared to overlook a day’s profit.

It’s farmers themselves who’ve been at the forefront of a continuing attack on Woolworths. It’s farmers, and even Federal Government ministers, who see Woolies as a major threat to “the unique rural heritage of Australia”. The $3 million the CWA will pick up is peanuts compared to what is being alleged by farmers, and what the courts are saying about the friendly folks at Woolworths.

In 2005, the federal Agriculture minister warned that companies like Woolworths, were driving Australian farmers out of business (ABC July 5, 2005). A Carnarvon grape and mango producer said that the Woolworths of this world, “will bend over backwards to increase profits … and the easiest option is to import cheap produce” (ABC August 4, 2005). Egg producers were being driven to the wall as Woolworths sold “generic eggs for 80 cents less than the local product” (ABC December 16, 2005).

At the beginning of 2006 it was Australian fruit growers who lost out as Woolworths sourced their Home Brand lines from China and South Africa (ABC January 25, 2006). Then came news that Woolworths was “fined almost $9 million after being found guilty of fixing the price of bread and abusing market power”.

Growers complained of the “concentration of retail power”, that led to “grower returns getting less and less” (ABC February 1, 2006).

By the middle of 2006, it was Sunshine Coast farmers, followed by strawberry, and then dairy farmers, who were “sick and tired of being rorted by the major supermarket chains”. According to the State member of Nicklin, “when I was trying to intervene on behalf of the dairy industry, I spoke to senior people in Woolworths and their response was, “we are not in the business of doing what’s good for dairy farmers, we are in the business of making profits for shareholders” (Sunshine Coast Daily November 29, 2006).

Consumer Protection (WA) at the same time was charging Woolworths with breaches of regulations relating to fuel pricing. And at year’s end, the ACCC after a three year battle, saw Woolworths fined $7 million for anticompetitive behaviour in the liquor market (ABC December 22, 2006).

During this same period, the CEO, a devout Christian, presided over a corporation which has become the largest liquor supplier and gaming operation (12,000 gaming machines) in the country, as well as a major pusher of tobacco, one of the largest cancer producing poisons, in Australia (400 deaths a week).

The New Year saw Woolworths under renewed attack, first on the cost of groceries and then over the cost of fuel. Despite the assurances from Woolworths, that “the drought was to blame for the cost of a basket of groceries rising 7.3 per cent, consumer experts said the nation’s supermarket duopoly was more likely the reason” (The Courier-Mail January 4, 2007). According to the NRMA, when it came to the cost of fuel, the supermarkets, including Woolworths, are “reducing competition by squeezing independent chains out of the marketplace” (ABC January 16, 2007).

Given this kind of publicity, the feeling among farmers, motoring organisations, consumer advocates, politicians, and the courts, its little wonder that Woolworths is desperate to be seen as the farmer’s friend.

It does however raise a number of issues, which should be considered before dashing off to do your shopping.

First, does it matter if there is a contradiction between what Woolworths does in its drive to keep shareholders happy, and its decision to give up a day’s profits? Do farmers, the CWA or even Woolworths itself, acknowledge any contradiction? Woolworths is not alone in putting up firewalls between its various operations, as a reading of the current Los Angeles Times analysis of the contradictions between the good works of the Gates Foundation and its investment policies shows.

How will the issue of profits be determined? Will strawberry farmers, or egg and beef producers, or fruit growers be any closer to knowing how much Woolworths is making on their products?

Finally, what of the CWA? Like churches, the CWA is slowly disappearing, yet in the same significant way, it’s an institution propped up by government cash. In 2002-3 it received $1 million for drought relief; this was followed by a further $3 million in 2005, and then at the end of 2006 another $4 million. And now another $3 million from Woolworths. To what extent administrative fees from these grants is keeping the CWA viable would make for interesting reading.

All in all it’s a spin doctor’s dream: families will receive a bit of cash, the CWA which fell for the con, will see both its bank balance and status enhanced, and Woolworths, will be seen to be doing its bit to maintain, “the unique rural heritage of Australia”!