Grilled: Top Woolies exec questioned over ongoing high meat prices

A top Woolworths executive has been hauled over the coals during a pressured interview on a Sydney-based radio station regarding consistently high meat prices.

The ongoing furore over meat prices has captured the attention of Australians, especially retirees who live off a fixed income, in the face of the ongoing cost of living crisis.

In the interview, which took place on 2GB on Friday, December 8, the gloves came off when radio host, Chris O’Keefe, asked Woolworths’ chief commercial officer, Paul Harker, to explain why customers were “paying the same price” for their meat when farmers were getting half for their livestock than they did a year ago.

The interview came on the back of a statement by Federal Agriculture Minister Murray Watt to News.com.au that it “doesn’t pass the pub test that Australians are paying so much more for meat at the supermarket than farmers are getting for their livestock”.

At the time he called on Coles and Woolworths to reduce their prices running up to Christmas.

With this in mind, O’Keefe did not hold back in his interview with Harker. “Where is the money being made?” he asked before adding, “You can see how customers would be a little confused about all this.”

A steadfast Harker highlighted the complexities of the meat industry by explaining that there are a “few things people don’t understand about the meat supply chain and what actually happens to a product after it’s been purchased off a producer through to getting onto retail shelves”.

Harker also explained that Woolworths pays producers on forward contracts and for hot carcass weight. In a nutshell, Woolworths foots the bill for the whole animal in the abattoir even when a lot of that product doesn’t make it into the stores.

“Twenty-five per cent of the animal we buy goes into fats and render, another 21 per cent is cuts that we don’t use in this country and there’s a very small export market for them with very low prices, like lips, ears, various cuts that don’t make it onto supermarket shelves,” Harker explained.

“That leaves us with just over half of the animal left that goes onto supermarket shelves, so by definition we nearly need to double the price per kilo that we pay for the whole animal to sell the half of the animal that Australian consumers buy.”

According to Harker, Woolworths buys direct from farmers, and not saleyards, on three- to four-month contracts which are “well above” the average livestock prices.

“I don’t have the figure in front of me now … [but] the latest contracts we’ve just gone into I know are well over $6 a kilo,” he said.

“We work with our producers that have been supplying us for decades to manage pricing so they don’t have the strong swings and roundabouts that happen in the livestock market that we don’t play in, so they can invest in their business. We buy directly off farmers and pay for all of the processing right through our supply chain.”

He illustrated that “when you think about that 54 per cent of the animal and look at our beef sales, about 40 to 50 per cent of our beef category sales are in mince, which is $11 a kilo”.

Harker also highlighted that with the plummeting cost of lamb, the supermarket had responded accordingly, dropping over 20 cuts by 20 per cent. 

O’Keefe was quick to challenge this justification by comparing a current catalogue with one from 12 months ago.

“Forequarter chops, boneless leg roast, bone-in lamb shoulder, it’s the same deal — you’re basically selling it for the same price today as you were 12 months ago,” he said.

Harker insisted this was not correct despite not having the previous catalogue in front of him.

This development in the ongoing saga around high meat prices precedes the upcoming senate inquiry where supermarkets will face allegations of “price gouging”.

The inquiry, announced by the Australian Green’s party, aims to investigate whether major supermarket chains have been hiking grocery prices as Australians stare down the barrel of a cost of living crisis.

Hearings are expected to commence in early 2024.