Store prices responsible for food insecurity in Aboriginal communities

We know prices are too expensive in Aboriginal community stores around the NT. To prove the point, we went shopping and we believe the results from our Market Basket survey will shock you.  

In April and May our shoppers went into 9 stores in the Top End with the same shopping list – made up of essential and popular products.

Shopping list:
  • Mi Goreng Fried Noodles 5pk
  • Weetbix 375g
  • Weetbix 575g
  • Deb Instant Potato Plain 115g
  • Bush Oven Bread 700g
  • Bushells tea bags rounds 200 pack
  • San Remo Spirals small No 15 500g
  • Palmolive soap gold 4pack
  • Colgate Toothpaste Maximum Floride Cool Mint 110g
  • Hazedenes Chicken Cuts 2kg Bag
  • Eggs Large Dozen 600g
And the results…

Our key finding was that all stores are more expensive than the store managed by AIG – blue ribbon for us!

More importantly though, how is it possible that one store can charge almost $25 more for the same basket of products? Obviously, it’s because the prices are higher. The trickier and more important question to answer is why.  For all the market basket results click here (link to the pdf).

Barunga charges $9.40 for 2kg of Hazledene chicken cuts and the Beswick store (which is run by the Commonwealth entity Outback Stores) charges $16.80. Its only 25km down the road! Another community store charges $24.60 for the same product.

Why the price difference?

There are three reasons why the prices are different between stores: rebates, ethics and freight.

Rebates

A rebate is money paid by the supplier to store management stock their products. Our research shows rebates can range between 1.5 and 25%. Rebates are calculated on each product and the higher the rebate, the more expensive the product becomes. Coke and tobacco reap the highest rebates in community stores. Yep – the most money is made by store management groupsand not the stores themselves if they sell lots of Coke and smokes!

Rebate revenue is worth millions of dollars in the Northern Territory alone.

Another significant problem with rebates is that it makes the store management groups, like the Commonwealth owned Outback Stores money through raising the cost of products in store. Last year Outback Stores made more than $2.6m in rebates https://outbackstores.com.au/wp-content/uploads/2019/12/OS-Annual-Report-19-web-spread.pdf  – and yes a large amount from selling tobacco in remote communities. The person shopping only sees that prices are high, they don’t see the money between store management groups and supplier changing hands in reward for stocking certain products.

Ethics

Charging high prices because people aren’t in a position to challenge it (or shop elsewhere) is another key reason why prices are high. Its called price gouging, and remains a very real problem in the NT.

There are ethical ramifications on food security for charging high prices. Like everyone the world over, shopping patterns are influenced by cost. If healthy products are expensive to buy, shoppers will choose the cheaper product. A pie instead of a fruit and vegetables for example or takeaway fried chicken instead of cooking at home with fresh produce.

The impact on health is significant, and unethical. The incidence of chronic disease in Indigenous populations is in large part due to the food prices in community, and therefore theimpact the store has on community health is significant.

Freight

Usually listed as the primary reason for high prices in community stores, but in reality, has a far lesser impact on the actual prices of products in the store.

Freight is the cost of getting the products from the supplier to the store. If a store is very remote, then the freight is obviously going to be more expensive. Freight should be cheaper for the larger management groups because they order in bulk which reduces the actual freight costs further.

AIG is a small store management group and if we can have low prices while paying freight, it is proof that freight is not as expensive as people are led to believe.

Keep comparing food prices  

We want to disrupt how community stores are managed in the NT through creating transparency about prices in stores. Its hard for people in remote communities to understand the situation they are in if they can’t compare prices in their stores to other communities.

AIG has created online shopping for the Barunga and Timber Creek communities which is a great service but for, but equally important is being able to offer the prices we charge. We don’t accept rebates from suppliers, and we don’t make a profit on fruit and vegetables. This is how our prices are low. If we can do it, other stores can do the same.

Check out the store and the prices www.barunga-store.myshopify.com