Eric Rush is on the money.
The former All Black and Foodstuffs owner-operator spoke with Dale Husband about National’s policy to potentially break up Foodstuffs, and within minutes he managed to expose the problem with the political debate around supermarkets.
The policy has more holes in it than a sieve sold on aisle six of my local supermarket.
For three years, New Zealanders have been hammered by one of the toughest cost-of-living periods in recent memory. Food prices, power bills, rents, rates, insurance and mortgages have eaten deeper into household budgets. Yet here we are, weeks out from an election, being presented with another supermarket restructure as though somebody has suddenly discovered the checkout is expensive.
There is no argument that our grocery market has a competition problem. The Commerce Commission says the major supermarkets still control more than 80 percent of the national retail grocery market and that retail prices increased in the latest reporting period. That is the independent regulator speaking, not Foodstuffs.
But identifying the problem and designing the right solution are two very different things.
Rush raises an obvious question: why is the political wrecking ball being swung at a century-old New Zealand co-operative model while the Australian-owned Woolworths remains standing largely intact? – thats me framing that question.
That does not mean Woolworths is somehow responsible for every problem either. The point is that if the objective is genuine competition, then the policy response should address the whole market, not simply reorganise one participant and hope competition magically appears.
The Commerce Commission itself treats Foodstuffs North Island, Foodstuffs South Island and Woolworths New Zealand as the three regulated grocery retailers. Its work is focused on barriers including wholesale access, supplier relationships, land access and the ability of new competitors to enter and expand.
That is where Rush’s argument becomes important.
The cost of groceries does not begin when a trolley rolls through the supermarket doors.
It starts on the farm. It runs through production, regulation, compliance, wages, transport, fuel, refrigeration, distribution, electricity, warehousing, GST and finally retail.
Farmers and growers face costs. Suppliers face costs. Trucking companies face costs. Supermarkets face costs. And eventually a great many of those costs find their way to one place — your grocery bill.
Meanwhile, the Commerce Commission has identified other serious structural problems. It says access to wholesale groceries remains a key barrier to competition and has been working on ways to make it easier for new retailers to enter the market and existing competitors to grow.
It has also identified more than 50 different types of supplier payments worth around $6 billion annually, warning that some arrangements can make it harder for smaller grocery retailers to compete with the major players.
Those are the conversations we should have been having with urgency.
Where are the new competitors?
Where are the meaningful reductions in barriers to entry?
Where is the serious conversation about the cost of getting food from paddock to plate?
And most importantly, after years of promises about supermarket competition, where is the relief for the whānau standing at the checkout today deciding what has to go back on the shelf?
Breaking Foodstuffs into different pieces might change the corporate structure of the supermarket industry. Whether it substantially lowers the weekly grocery bill is another question entirely.
And that is the part politicians too often forget.
Whānau cannot eat a market restructure.
They cannot put another Commerce Commission review in the kids’ lunchboxes.
They cannot pay the power bill with another announcement about what might happen years from now.
For households struggling today, the supermarket debate is not an academic exercise in market design. It is the difference between meat and no meat, fresh fruit and cheaper alternatives, filling the car or filling the cupboard.
That is why Rush’s intervention matters. Agree with every part of his argument or not, he has dragged the conversation back to the practical question politicians should have been answering all along:
What will actually make food cheaper for New Zealand families — and when will they see the difference?
After three years of talking about supermarket reform, we should already have a much better answer.
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