Melbourne – 6.00 am: Frustrated fruit and vegetable wholesalers from the Epping Market held a protest today outside the Melbourne Market Authority, voicing their anger over a massive rent increase announced last week.
The Government-owned Authority - which operates Victoria’s largest fruit and vegetable trading centre – plans to hit wholesalers with an eye watering 100 per cent rent hike over the next 10-years.
Speaking at the protest, Fresh State CEO Jason Cooper said the rent increase would push many of its wholesaler members over the edge. Mr. Cooper said since going public with the rent increase, he was surprised by the widespread lack of understanding about the wholesale industry.
“There have been some misinformed comments recently,” Mr Cooper said (see below). “People should check their facts. The facts are this rent increase is a recipe for disaster. It will not only push fruit and vegetable prices up, but also push wholesalers out of business, and push families, restaurants, and grocers to the brink. With fresh produce we are headed towards a much bigger cost-of-living crisis than many people think,” he said.
Claim #1: “The rent increase would have no impact on prices in supermarkets.” (Source: The Herald Sun , Friday 11 Oct, reference to a “Government Spokesperson”).
FACT: The rent increase affects ALL INDEPENDENT supermarkets and grocers, as well as fresh food markets including South Melbourne Market, the Vic Market, Dandenong Market and Prahran Market. While it won’t affect Coles and Woolworths, who deal directly with the grower, it’s misleading to suggest the rent increase will have no impact on supermarkets.
Claim #2: “It’s not going to have an impact on those arrangements that are currently struck, with contracts with supermarkets and other producers.” (Source: Premier Allan, Friday 11 Oct – multiple media outlets).
FACT: Epping wholesalers do not have locked in contracts with growers. Therefore prices at independent supermarkets, grocers, and markets will be affected.
Claim #3: “Over that 10-year transition phase, rents for the market were not increased during that period of time- they were held for that period of time, recognising that transition, supporting stall holders to move to a brand-new purpose-built facility that was built for the growth of the industry.” (Source: Premier Allan, Friday 11 Oct – multiple media outlets).
FACT: Since relocating to Epping in 2015, wholesalers have seen rents climb by 46.5%, with average annual increases of 4.34%. Tenants currently pay more than $100,000 per year for an average wholesale store of about 193 sqm. The new increase means tenants will pay $220,000 for the same store by the 10th year of their rental agreement. That means wholesalers are paying $540 per square metre in Victoria. At the end of year 10, they’ll be paying over $1,100 per square metre. That’s more than the cost to rent office space in Collins St.
Claim #4: “This rental increase impacts those leaseholders. At the moment, I think there's probably about 20 tenants that this impacts.” (Source: Melbourne Market Authority CEO Mark Maskiell, Friday 11 Oct – multiple media outlets.)
FACT: The lease expiry dates for tenants are staggered with a number of additional leases set to expire in March 2025, and the remaining leases expiring in August 2025. This means, within 9-to-10 months, ALL leases will reflect the new increases.
Claim #5: “The money is for running the market- only a small amount of money goes to the Government.” (Source: Peter Tuohey – Melbourne Market Authority Chair – Victorian Country Hour – ABC Radio, 11 Oct.)
FACT: The Melbourne Market Authority has generated over $27,399,000 in cash surplus from operating the Epping market since 2015, and significantly, $6.26m just last year (Source: MMA Annual Reports). Any re-investment in the site (solar panels, undercover parking, additional warehousing) has only benefited the Melbourne Market Authority and further increases costs for the tenants and users.
Claim #6: “It’s certainly not going up 100% over the next 10 years.” (Source: Peter Tuohey – Melbourne Market Authority Chair – Victorian Country Hour – ABC Radio, 11 Oct.)
FACT: 7.6% pa compounding for the next 10 years is an increase of over 100%.
Claim #7: “We had resisted and not put-up rents for a number of years, I think 5 or 6 years. When we went through Covid we actually offered rent support to try and help wholesalers, retailers and growers manage their way through tough times.” (Source: Peter Tuohey – Melbourne Market Authority Chair – Victorian Country Hour – ABC Radio, 11 Oct.)
FACT: Since relocating to Epping in 2015, wholesalers have seen rents climb by 46.5%, with average annual increases of 4.34%. The new 100% increase over the next ten years will be on top of the almost 50% increases already endured.
These graphs show the rent increases at the Melbourne Market since 2015, including the proposed 100% increase over the next 10 years vs. a similar wholesale market in Brisbane where their rents are more sustainable for the industry.
Claim #8: “The MMA has completely lost market tenants' trust by making it hard to compete with interstate markets and failing to see that the rent hike would make fresh produce unaffordable and add to cost-of-living pressures.” (Source: Fresh State CEO Jason Cooper, 16 Oct.)
FACT: Correct. That’s why Epping wholesalers are calling on the MMA Board and CEO to resign.
“It’s hard to believe that an essential service like fruit and vegetables – and the people who work hard to deliver it - could be put at risk due to the selfish and completely out-of-touch actions by the governing Melbourne Market Authority. Yet, that’s exactly what’s happening,” Mr. Cooper said.
Mr Cooper said Victorian wholesalers already paid more for rent than in other States, such as the Brisbane market.
The wholesale fruit and vegetable market supplies to independent groceries, independent supermarkets, restaurants, Melbourne, Prahran, and South Melbourne markets, fast-food chains, as well as childcare and aged care homes, throughout Victoria and nation-wide.
Mr Cooper added:
“Someone's got to cover the extra costs. You either take it from the grower, pass it on to the buyer, or take it out of your own pocket and risk going out of business.”
“Everybody should be able to eat and afford fresh produce. The Allan Government should be taking cost-of-living pressures off, not piling them on. The last thing struggling families, restaurants, and care providers want is to pay more for fresh fruit and veg than they need to.”
“It’s scary. Our wholesalers are on the verge of a financial and psychological breakdown. Some have walked away from the business in tears. In this pressure environment, it’s nearly impossible to attract new wholesalers to the market.”
Last week, Fresh State launched its Take the Pressure Off Campaign on behalf of its wholesaler members, aiming to take the pressure off fruit and vegetable prices and temporarily freeze rent at the wholesale market.
Mr Cooper said the Campaign sought to establish a viable, long-term commercial arrangement for wholesalers.
He said the Campaign would gain momentum in the coming weeks.
Key Facts:
1. How much is the proposed rent increase for wholesalers at the Epping Fruit and Vegetable Market?
The increase in rent to be paid by wholesalers will be between 6.72% and 7.6%, compounding year on year for 10 years, meaning it will more than double in that time.
2. How will the rent increases impact wholesalers, retailers and growers?
This will have a significant impact on wholesalers as it will reduce their margins considerably, meaning they will inevitably have to pass the burden on to growers and independent retailers. This will also affect other buyers including restaurants, childcare centres and aged care homes. The rent increase may also force some wholesalers out of the market, as they will no longer be viable. The rent increase also has the potential to reduce competition as it will be too expensive for new wholesalers to enter the market.
3. Is the rent increase likely to be passed on to consumers?
Yes, the rent increase will be passed on to consumers. Ultimately, consumers will pay a higher price for fresh fruit and veg as retailers will be forced to increase their prices.
4. How much will the price of fresh fruit and veg increase?
The wholesalers, growers and retailers understand the current cost of living crisis so while they continue to reduce their own margins where possible, with a massive 7.6% annual increase in rents, some of these costs will be passed on so consumers should expect their fruit and veg costs to increase.
5. When will the fresh fruit and veg price hikes kick in?
The Melbourne Market Authority (MMA) has indicated a November timeline for the rent increases. Consumers should expect to see prices rise after this.
6. How will stopping the rent rises keep fresh fruit and veg prices down?
By stopping the proposed 100% rent hikes, we can help keep operational costs for wholesalers, retailers and growers stable, reducing the pressure to raise prices on fresh produce. This will ensure fresh fruit and vegetables remain affordable (and accessible) for consumers, while supporting local businesses.
7. What kind of support or relief would you like to see from the government to help alleviate the financial burden of these rent hikes?
Zero rent increases. Victorian wholesalers already pay more for rent than in other States (e.g. Brisbane market). We need to keep fresh produce affordable for everyone.
8. Is there potential for the rent increases to compromise the quality of the produce supplied by wholesalers?
We’re committed to maintaining high standards, but with tighter margins, it becomes more difficult. We’re actively working to avoid any drop in the quality of the fruit and veg supplied.
About us:
For more information about the Take the Pressure Off Campaign, visit https://www.freshstate.com.au/pressureoff/
Contact details:
Richard Amos RoyceComm - M: 0418 344978 E: Richard@royce.com.au
Adi Stevens RoyceComm - M: 0407 411 088 E: Adi@royce.com.au
