Shane Jones wants Fonterra-style regulation for supermarkets

Source: 1News

Shane Jones is calling for Fonterra-style regulation of the country's supermarket duopoly.

"The bottom line is, unless we have some regulation, that treats the duopoly powers of the supermarkets in the same way as the dairy farmers and Fonterra … the supermarket barons will continue to spirit away profits year by year," Jones - a former NZ First MP told Breakfast.

New Zealand's dairy industry is regulated by the Dairy Industry Restructuring Act (DIRA). It was created in 2001 to ensure the country's markets for dairy goods and services is contestable.

DIRA regulates four key areas of the industry - the export quota management system, Fonterra's activities, its farmgate milk price and herd testing and the dairy core database.

Supermarket shopper (file picture).

A recent Commerce Commission study found competition in the supermarket sector wasn't working well for consumers.

The duopoly of Foodstuffs and Woolworths NZ are reportedly making more than $1 million of excess profit per day.

READ MORE: Price of burgers, coffee increase as food prices rise again

Both supermarket chains recently announced they were freezing or cutting prices on some items. This has been met with criticism - largely directed at Woolworths NZ - over the items frozen.

Few of the items were fresh fruit and vegetables, and many of the items were Countdown's own home brand products.

There were also alcohol and salmon products and dozens of herbs and spices.

The only vegetables included in the price freeze were onions, carrots and pumpkin.

Consumer NZ launched a petition this week in a bid to combat high grocery prices.

Jones said he felt "enormously" for suppliers, telling Breakfast they were "intimidated" by the supermarkets and were finding the current situation "harrowing".

Three growers who spoke to Breakfast on the condition of anonymity said the duopoly had a "take-it-or-leave-it" approach to price negotiation and claimed they had been steadily increasing their margins since 2008.

File picture.

The third said they had been offered 50c a kilo for produce which then retailed at $5 a kilo.

Jones told Breakfast he felt the Commerce Commission had let consumers down.

"They used muscular rhetoric to start off with. However they were like some sort of theatrical character at the end of the day looking for a heart and looking for courage. Very disappointed by the approach of the Commerce Commission."

He said there was a "very good opportunity" for Commerce and Consumer Affairs Minister David Clark - and the Government - to "come out not as a poodle but as a guard dog".

Jones remarked the Government had an opportunity to open up the country's "monopolised" and "air tight" structure.

"It's like a duck's rear end, that's how the supermarkets run their businesses," he said.

"The Government needs to be like a guard dog on behalf of consumers rather than a poodle."