Eggs Down and Out at Coles and Woolworths

eggs-august

In the old days bread, milk and eggs were the staples of our diet. Ok, those old days were a long time ago – almost back to war rationing days when families faced empty shelves as supermarkets ran out of essentials.

Post-war the world returned to normal and the shelves were always full of food. When in short supply, some things became luxuries and were signalled by limited supply and high prices. Just as we see with the price of lobster, wagyu and out of season stone fruit.

The forces of supply and demand via the price mechanism keep our shelves full and producers competing and viable. As Adam Smith told us, it’s the invisible hand of the market at work. But what happens when the hand of the big retailer is thrust deep in the pockets of the growers of the produce that fills our shelves? Rather than leave the market to do its job, big retailers can destroy markets and hurt both consumers and producers as they greedily stuff their own pockets.

We have seen this happen over the last decade across the dairy industry with milk priced so low that half of Australia’s dairy farmers exited the industry. For what end ? Nothing more than to allow the supermarkets to sing ‘down, down, down’ when you would prefer to be watching the footy or cricket. And ‘down, down, down’ is exactly what happened to local milk production.

After 10 years of destruction, the pressure started to mount from the state and federal government and the retailers had to end the campaign as it did not fit well with their image of happy farmers standing next to celebrated chefs selling the lie that Coles and Woolworths support Australian farmers.

But as fast as the big supermarkets’ public relations department switches to talking about how they are now supporting dairy farmers with higher milk prices, the corporate bigwigs are looking for another product to lead the ‘down, down, down’ charge. So guess what has become the next product to crack? You guessed it: eggs.

For the last few months eggs have been running out of the shelves in supermarkets across Australia. In some cases all you will find is misleading empty egg cartons giving the impression that there is no rationing in place.

But the fact is, there is a war going on. A war against egg producers as Coles and Woolworths refuse to allow the market to do its thing and balance supply with demand. As the price of grain went up across Australia to near record levels, and the big retailers refused to increase wholesale prices, egg producers were forced to cut back on their chicken numbers leaving sheds empty.

Then there were a couple of disease outbreaks that left big million-chook operations shut down for extended biosecurity clean outs. Just as should happen in order to keep consumers and producers safe.

Production is down, so the market tells us that prices should rise to balance supply and demand. In the real world this is exactly what would happen but in the world of duopolies and oligopolies, this never happens. Instead the duopoly uses their market power to fleece the producers at the same time that they convince customers they are their best friend. ‘Down, down, down’ go the producers and ‘out, out, out’ the door go the eggs until there are only empty shelves and empty sheds and only two winners: Coles and Woolworths.

It is time now for Coles to let market forces prevail. Put up the price of eggs, pass it on to consumers and keep eggs on the shelves and chooks on the perch.

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