Your Strawberries Are Expensive. The Farmer Is Going Broke. Here’s Why.
By Liam Scotchmer
References below.
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The next time you’re at the checkout, remember the price you’re paying isn’t just supply and demand; it’s the result of a power imbalance most people have never heard of. It's called monopsony power; the Australian Competition and Consumer Commission (ACCC) identified Coles and Woolworths as having monopsony power. (ACCC, 2025) The two firms have strong bargaining power when obtaining lower wholesale prices; “this often takes the form of resisting wholesale price increases in whole or part,” which would be beneficial to consumers if the savings were passed through to consumers. (ACCC, 2025) However, even if consumers benefited from these savings being passed through, suppliers are ultimately the ones losing…
What Is A Monopsony?
Firstly, a monopoly is one seller with pricing power over buyers. (Hayes, 2024) Flip the monopoly logic and you have a monopsony; a single buyer with pricing power over sellers.
The difference lies in who controls the market: buyers in monopsonies, sellers in monopolies. (Young, 2022) Woolworths and Coles are the buyers, farmers and other suppliers are the sellers.
Coles and Woolworths hold 67% market share, per the ACCC. (2025) That gives them enormous bargaining power. Suppliers can’t walk away, there’s nowhere else to sell (at scale). So prices get pushed down, supplier profit erodes, investment drops, firms exit, and overall production falls. It’s an inefficient level of supply, creating a deadweight loss (a loss of economic efficiency). This monopsony power is known to occur mostly with fresh producer suppliers. (ACCC, 2025)
The ACCC said it is doubtful any competition will arise in the foreseeable future (short to medium term). The epitome of business against Coles and Woolworths is ALDI, who took 20 years to achieve its current market position: a full national supermarket chain, hundreds of stores, an established national distribution network, and (almost) a full product range. And more competition? Well, per the ACCC, the only likely entrants are “large well-established international supermarket retailers.” However, Kaufland, a major German international chain, was the latest entrant to attempt large scale entry, but exited in early 2020 before opening a single store. (ACCC, 2025) Being a large, well established international supermarket retailer with lots of capital and knowledge might not be enough; maybe it’s luck.
How It Plays Out
Paradoxically, lower supplier prices don’t mean lower checkout prices. The savings aren’t passed on. Instead margins go up, the ACCC confirmed Coles and Woolworths are among the most profitable supermarkets globally. (ACCC, 2025) The monopsony power squeezes the supplier; suppliers see less profit, invest less, and are forced to exit the market. It’s the consumer who ends up paying for it unknowingly.
Monopsony power is why your strawberries are expensive and the farmer growing them is going broke.
What It Means For You
References
ACCC. (2025). Supermarkets Inquiry Final Report. https://www.accc.gov.au/system/files/supermarkets-inquiry_1.pdf
Ainsworth, K. (2025, March 21). From price gouging to promotion tactics, here are the key takeaways from the ACCC’s supermarkets report. Abc.net.au; ABC News. https://www.abc.net.au/news/2025-03-21/accc-supermarkets-inquiry-key-takeaways-coles-woolworths-aldi/105079916
Hayes, A. (2024, June 21). What Is a Monopoly? Types, Regulations, and Impact on Markets. Investopedia. https://www.investopedia.com/terms/m/monopoly.asp
Young, J. (2022, September 14). Monopsony: Definition, Causes, Objections, and Example. Investopedia. https://www.investopedia.com/terms/m/monopsony.asp