GIA says Bunnings should answer to the Food and Grocery Code

by | Apr 26, 2024

For the first time, Australia’s commercial gardening and nursery sector has gone public with its concerns about Bunnings‘ market power and how it treats growers – calling for the retailer to face the same scrutiny as Coles and Woolworths, reported ABC News.

Greenlife Industry Australia (GIA) represents the $2.8 billion nursery industry that employs more than 25,000 people and grows seedlings, plants and trees to be sold to gardeners. In its submission to the Senate inquiry on supermarket prices, GIA claimed that Bunnings’ extensive market share enabled it to control the prices and supply of plants.

“Whilst growers of nursery products do supply plants to many supermarkets, our bigger concern is with the supply of plants to what are commonly described as big box stores,” the GIA submission said.

“Bunnings is by far the biggest of these, maintaining a national market share of 70 per cent, rising to over 80 per cent in some regions and towns.”

GIA said by volume of units sold in Bunnings’ stores, plants were second only to tins of paint and had helped the giant retailer post a revenue increase of 4.4 per cent to $18.5 billion.

“We have lots of examples where we feel Bunnings is abusing their dominance of the marketplace,” GIA Chief Executive, Joanna Cave said.

“Growers have shared their stories with us in complete confidence because they are genuinely scared of retribution.”

Ms Cave said growers who supplied Bunnings and other stores like Mitre 10 and IKEA needed to be protected from unfair trading practices, which could be achieved if the government included them in the Food and Grocery Code of Conduct and made the code mandatory.

“Growers really feel that Bunnings has all the power in the relationship,” Ms Cave said.

“[Bunnings] sets the price, control supply, there is an absence of proper legally enforceable contracts – all kinds of practices that would be in breach of the code were Bunnings covered by it.”

“If everything they are doing is above board they have nothing to fear – but it will certainly be a reassuring gesture to their suppliers, who are on their knees,” she said.

ABC News reported Bunnings’ Managing Director, Mike Schneider, said the business worked hard “to build longstanding, win-win partnerships” with its plant suppliers.

“We have robust processes in place, including as part of our trading agreements, to ensure those relationships are fair and transparent,” he said.

“Many of our supplier relationships span a number of decades and generations, and over the years they have engaged our team on ways to partner, grow and collaborate to support their businesses.”

Mr Schneider said Bunnings had a range of avenues available for suppliers to raise concerns, including an anonymous and secure reporting service.

“While we respect the role industry associations like Greenlife Industry Association play, we disagree with a number of claims they have made and have reached out to them to discuss these matters and better understand the details further,” he said.

“There is a wide range of retailers competing in the greenlife sector … and we estimate our market share of the category to be less than 30 per cent.”

Federal Agriculture Minister Murray Watt said calls to have big box stores included in the code of conduct was “absolutely something worth looking at”.

“Frankly I was not aware they [commercial plant growers] were not currently covered by the Food and Grocery Code,” he said.

“It seems reasonable to me [that Bunnings would be added to the code], but I think a lot of Australians would be surprised to learn that Bunnings dominates the plant market and has a bigger market share than the retail duopoly of Coles and Woolworths.”

“What we are trying to achieve with these reviews, and we have got an ACCC one underway as well, is make sure families and farmers get a fair deal from the supermarkets and big retailers. There have been too many examples where consumers are paying too much and where farmers and nurseries [do] not get a fair share,” Minister Watt said.