In testimony provided today at hearings as part of the ACCC Supermarket Inquiry, current and former senior managers at Woolworths have admitted to shortcomings in the accuracy of forecasted volumes it has provided to fresh fruit and vegetable suppliers.
Current Woolworths CEO Amanda Bardwell agreed with ACCC senior counsel that data collected at the checkout on past customer purchases gave the supermarket a firm understanding of likely future demand.
Former Managing Director of Woolworths Supermarkets Natalie Davis then reported an internal review had found, given the data available to them, Woolworths had failed to provide volume forecasts to suppliers that were as accurate as possible.
Ms Davis went on to explain this failure as arising from not applying new capabilities in interpreting data as they became available.
Chair of the NFF Horticulture Council, Jolyon Burnett said the testimony validated claims that have long been made by suppliers and industry representatives.
“This is a significant admission from Woolworths that undercuts their claims of having the interests of their suppliers at heart in their commercial dealings,” said Mr Burnett.
“Providing volume forecasts greater than the amount reasonably expected to be bought not only undermines the financial sustainability of growers but creates avoidable food waste and an oversupply scenario that ultimately serves to push prices down at farm gate.
“We should also be sceptical of the simplistic explanation that a company turning billion-dollar profits hasn’t had the wherewithal to apply new techniques in data interpretation.
“Our view is that it’s more likely Woolworths hasn’t had a commercial incentive to provide more accurate forecasts and that blissful ignorance has been its preferred position.
“Given the risks to the sustainability of its fresh produce supply chain, the Woolworths board should be asking for how long inaccurate forecasting has been known and what steps have been taken to address it.
“And the Federal Government must now be revisiting the question about how the forecasting of volumes should be regulated to assure transparency in trading and the sustainability of the fresh produce sector.
“The Council has already confirmed it cannot support the updated Food and Grocery Code of Conduct that the Treasury put out for consultation, in part because of how weak the requirements are around supermarkets providing accurate forecasts.
“Requiring supermarkets take “due care” when arriving at these forecasts doesn’t go far enough. We either need the Code to be far more prescriptive in terms of how forecasts are developed and communicated, or a set of guidelines be established for the same purpose.
“The Council, its members and fresh produce suppliers will continue to watch these hearings with great interest and hope the Federal Government is doing likewise, as it considers final drafting of an updated Food and Grocery Code of Conduct.”
