A better dealAFTER 21 years supplying direct to Coles, Perth Hills orchardist Guilio Petrucci turned on his heel and walked away from supermarkets.
Nanjing Night Net

“In they end I said, ‘you’re going to send me broke’,” said Mr Petrucci, who grows 8.5 hectares of mostly stonefruit in the Kalamunda-Lesmurdie area.

“It was deteriorating my health – I wasn’t happy anymore.”

“You’d deliver; you’d always be waiting for the phone to ring, because they wanted everything for nothing, and everything perfect, like it came out of a machine. At the end of the day, you can’t grow fruit like that.”

Mr Petrucci now sells 30-40 per cent of his fruit to Aussie Farmers Direct (AFD) – all the Western Australian franchises can currently take – and puts the rest into local markets or exports it.

If he could supply AFD solely, Mr Petrucci thinks he would be “miles ahead” in profitability.

“AFD’s price structure is a lot more average. At the start of the season, when things might be going for $9 a kilo – we don’t go there. At the end of the season, when prices might drop to $1 a kilo – we don’t go there either. We hover in the $3/kg range.”

That’s a better option than the uncertainty he experienced with Coles, which Mr Petrucci said would ask growers to drop prices to support internal promotions.

“You would go into a shop and see your fruit sold for $5.99/kg, and we’d sold it for not even $1/kg. And we had packing costs on top of all that. We had to use their crates in the end, and they were charging us 20 cents a day to use them.”

“We had to hire pallets off them, but the hire cost didn’t come off our account until days after we’d delivered. So they would get the fruit delivered, the fruit would be in the shop and the pallet back at Chep, and they didn’t pay costs – the grower cops it all.”

And Mr Petrucci likes the fact that AFD will talk to him when he hits a bump.

“With Coles, you’d call, leave a message, and if they needed stuff they would ring you back, but if they didn’t need it they would never get back to you.”

Putting farmers first“On paper, Aussie Farmers Direct was never going to work,” says the company on its own website.

And with strategies like not negotiating on price with the farmers who supply it, conventional wisdom suggests it shouldn’t work. Yet so far, it does.

When AFD talks to farmers about supplying produce, it goes in armed not with a price grid, but its own Fair Food Charter, which lays out some idealistic rules of engagement. One is the sustainability of the farmer it works with.

In AFD’s talks with a farmer, “It’s more of a discussion about what’s sustainable for them,” said Richard Lange, AFD communications manager.

“We start with their economics and what’s going to make the relationship attractive. We find out about their background, what they are looking for in their business, what they might be looking to grow. It’s not just a transaction.”

AFD calculates that there are three less hands in its supply chain compared to the conventional retailer model (and that its produce does seven times fewer “food miles” between farm and consumer). Extra margin is shared with farmers.

AFD’s Fair Food Charter goes further: if one of its farmers has a crop that falls short of specification, AFD will often still help to get rid of as much of it as possible.

When a pineapple grower in central Queensland had an undersized crop due to untimely rain, AFD “took the whole crop, did a promotion across the country, and moved it in two weeks,” Mr Lange said.

“Otherwise he would have had to throw the crop out. That’s 100 per cent of their income that is lost, and there’s all the resources that go into producing that crop.”

Such satisfactory results are not always possible, but when they occur, “it gives us a real buzz”, Mr Lange said.

This story Administrator ready to work first appeared on Nanjing Night Net.