Conventional strawberries case study – Still in the game, but only just

Alan has been growing strawberries for 26 years. He originally farmed in the South West, but mainly due to labour shortages, he moved his operation to Perth where he has established a market garden in the outer suburbs of Perth. This case study was the only case study outside of the South West, selected because there was no suitable scale examples of a conventional strawberry supply chain in the South West. Alan grows the strawberries on constant rotation on his small acreage and he is one of the largest growers in the state, growing around 450 tonnes annually. The strawberries are distributed throughout Western Australian and the eastern states by a wholesaler in Perth. His main market is Woolworths, both in WA and the eastern states but his product is also stocked by a number of smaller supermarket chains.

Alan makes significant efforts to manage his property sustainably with a key focus on improving water efficiency and the use of integrated pest management. He is part of the Waterwise program and carefully monitors water use, which comes from groundwater. Waterwise is a WA government program aimed at increasing water efficiency in irrigation. He is aware of the impact of market gardening on the local aquifer which shows evidence of increased nitrogen levels. Sustainability of groundwater supply is also an issue, with market gardeners in the area essentially competing with the state government owned WaterCorp for groundwater. He says extraction by WaterCorp has lowered the water table by about 7-10 metres. Alan’s peri-urban farming environment has some disadvantages, such as the new road drainage installed above his property that flooded his crop and set up a cycle of disease during one growing season.

Alan’s operation is fairly chemical intensive with fumigation and weed control requirements. He is gradually reducing his pesticide use, assisted by an agronomist who checks the crops weekly and advises on targeted pest control rather than broadscale preventative spraying. He is also reducing his fertliser use through improved soil monitoring programs. He recognizes that alternative methods of leaving the soil fallow and increasing organic matter could decrease the reliance on chemicals; however he suggests that implementing this would be too expensive.

Seconds and frozen strawberries are difficult to place and they are forced to dump significant amounts. Alan mentioned that he had recently had to dump around 40 tonnes of perfectly good fruit. He commented that this is an economic reality. He said ‘we haven’t got the workers, can’t

process it and there’s no processing market, they’d rather buy frozen Chinese strawberries because they are cheaper’. He added ‘quality has nothing to do with it. It’s about price’.

Some of the seconds are sold to a gourmet jam producer in Margaret River. This small manufacturer uses the strawberries for their own products and also produces a line of jams, sauces and strawberry wine under Alan’s label that is sold from tea rooms at the farm gate of Alan’s farm. Alan has experimented with a number of markets during his time including selling strawberries to the dairy food manufacturer discussed in the conventional dairy case study detailed in this report. He commented that this was a negative experience and as well as administrative bungles, the company halved its original order during growing season because they had found cheaper strawberries in New Zealand and Poland. When the New Zealand sources did not come through and the Polish consignment defrosted on the tarmac, the dairy manufacturer came back to Alan. He said that they no longer deal with large scale manufacturing companies because of these sorts of experiences.

Alan grows a number of varieties sourced from the University of California. These are supplied under license and there is a non-propagation agreement so all plants must be destroyed after fruiting and no runners produced. In terms of taste, Alan says that this is important to him and to the consumers but ‘everyone else in the chain is geared to “rocks” and not losing the product’. Ability to travel is the essential criterion and flavour is a bonus. ‘They want looks, plastic red strawberries’. On this Alan commented that Woolworths have rejected a new variety which is a good soft tasty strawberry because it’s too soft and they can’t handle it. He added that more that a million plants of this variety were established in WA in 2006 and there was no market for it.

Shelf life is critical because the produce is roaded to cities in all states, including Adelaide, Melbourne, Sydney and sometimes Brisbane. Airfreight is becoming too expensive. Alan added that the major chains such as Woolworths often have a three day turnaround at their distribution centres, lengthening the time it takes to get to the shelf. Hence even if the produce is freighted to Melbourne in 2.5 days, it could sit in their distribution centre for a few days before it gets out into their supermarkets.

Alan also commented on the retailer requirements for removal of place of origin information from packaging, saying that this means his product loses its identity. Alan used to have a significant export market but hasn’t exported for the last two years, influenced by their export distributor going bankrupt. He adds that the export market is price driven and quality and flavour doesn’t

come into it. Hence the options are the national market or a direct market. Alan took a deliberate move back into the local market a few years ago, setting up a van on the road and supplying shops direct. This enabled the production of a better quality product and better packaging. They campaigned with several small supermarket chains in Perth and supplied seconds for tastings. Some of these shops had a 300% increase in strawberry sales in one year. Alan says he prefers to deal with these smaller businesses but has to continue to supply around 90% of his produce to his bigger market (Woolworths) for financial viability.

On the economic sustainability of the industry, Alan was disillusioned. He said that the number of strawberry growers in the state has dropped from 170 twenty years ago to around 60 in 2006. Labour is almost impossible to obtain, particularly with the mining boom, and returns are diminishing. He did not feel positive about his future in the industry and suggested that increased land value is the major financial gain from the business.

Alan implements the Woolworths Freshcare QA program. He was one of the first growers in the state to implement the Safer Quality Food (SQF) program, and he was also implementing ISO, hoping for market advantage. He left the program after being disillusioned by the selling of SQF by the WA government overseas, ‘rather than using a good idea for the benefit of WA farmers’. It was also costing the WA Strawberry Wholesalers Association $100,000 per annum so as Alan says, he was probably about the first to ditch it.

The Freshcare QA program costs only a few hundred dollars a year but Alan says it is meaningless because the inspector, who is likely to be from an unrelated sector, is un-familiar with strawberry growing and the program has a narrow focus. ‘The bottom line is – you just do the basics and spend the least amount of money and time on it’ suggests Alan. However he said that they have maintained the original QA systems.

Alan was generally supportive of the concept of environmental certification but was sceptical about how the process might be implemented and managed. His major concern was the economic viability of the industry in the immediate future. He said that he was not considering a five year plan at the moment because of the difficult financial climate for strawberry growing

The representative from the retailer that stocks this product suggested that meeting consumer expectations of supply were the key issues. He also suggested that the company did not anticipate a price signal for environmental responsibility:

This retailer sources products only from growers certified under the retailer’s own QA program and it was suggested that any environmental requirements would have to fit in with that program. In 2006, the retailer representative suggested that there had been no consumer research on environmental values in products by the retailer and there was no immediate plan to incorporate environmental aspects into product sourcing policies.

The conventional retailer of this product suggested that a price premium for environmentally friendly produce is unlikely because environmentally friendly should be the new benchmark. According to the retailer, the cost of quality assurance and potentially environmental assurance, would not be passed on to the consumer and would be mostly borne by the growers. Figure 17 shows that any environmental values held by the farmer in this case study are unlikely to be passed onto the consumer.

Figure 17: Transfer of environmental and other sustainability values in conventional strawberry case study

Product statistics

Retail price = $1 to $3/ punnet: 100% conventional