Last Tuesday’s pledge by Woolworths to donate its profits for the day to farmers was welcomed by those in drought-ravaged rural Australia, but not everyone accepted the donation without question.

South Australian Farmer’s Federation general manager Carol Vincent labelled it a “heart-tugging publicity stunt”. She told the ABC that Woolworths regularly underpays farmers: “Essentially this $3 million is what they really owe our farmers anyway.” Vincent wouldn’t comment further on the issue today.

Jan Davis, Chief Executive of Growcom, a representative body for Queensland’s fruit and vegetable growers, told Crikey the gesture was generous but was also somewhat hypocritical.

“The home brand issue is becoming quite topical for both Woolworth and Coles. Their strategy is to replace name brands with their own brands, which are made with cheaper imported products, and that’s pushing prices down. There’s been a backlash among consumers and that affects producers. So on the one hand they’re helping Australian farmers, but on the other ignoring them in favour of cheaper imported product. Consumers should be aware of this contradiction.”

Davis says the 70% stranglehold of the groceries market enjoyed by Woolworths and Coles doesn’t make them bullies, but “there’s very little option but for producers to deal with them. The market is dysfunctional because of that dominance.”

Others working in the rural sector have been circumspect about the donation. Although Woolworths recorded its first billion dollar profit last year, the Country Women’s Association, which is responsible for distributing the donation, said the money was welcome but acknowledged it wouldn’t go very far.

The final profit figure for the day was $4.7 million, up 60% on a normal day’s trading, and $1.7 million higher than the original estimate. Farmers can apply for up to $1500, meaning 3150 farming families could apply for the full amount. To put that into context, by October last year the Australian Government has distributed $1.2 billion – roughly equivalent to Woolies 05/06 profit figure – among 53,000 farming families affected by the drought.

A spokesman for the National Farmers’ Federation told Crikey: “Do farmers have an issue with market dominance and market power? Yes, but this is not the forum in which to bring it up. The ACCC is looking into it and we support that, but we’re not going to look a gift horse in the mouth.”

Peter Fray

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