Vege growers sign up for savings

WA vegetable growers have signed a groundbreaking deal with local government which is set to deliver huge cost savings and drive expansion of the $312 million-a-year industry.

The deal, due to be confirmed today, gives vegetablesWA members unprecedented bargaining power on input costs through an alliance with the WA Local Government Association.

Growers, who face the highest input costs in Australia, will be eligible for the discounts and rates negotiated under WALGA's preferred supplier tender process, which sees suppliers compete for contracts worth $200 million a year.

The deal has been described as a win-win, adding to WALGA's bargaining position and allowing individual growers to leverage off the market power of local government.

Growers are set to reap savings of 15¢ a litre on petrol and diesel, 17 per cent on agricultural equipment, up to 22 per cent on contestable energy - one of the industry's major input costs - up to 40 per cent on sustainable energy infrastructure and up to 30 per cent on trucks.

The supply contracts cover a host of other input costs, from administration services and work wear to tyres and batteries.

New vegetablesWA chief executive John Shannon said driving down spiralling input costs would allow growers to reinvest in meeting local demand and boost exports.

"We started to think how we might address the issue of input costs by aggregating demand across a number of growers in order to have a better bargaining position," Mr Shannon said.

"In doing research we met WALGA, who carry out that role for their members, with a view to learning and rolling out a similar system ourselves. They were extremely helpful and said we can either teach you or you can come on board with our existing tender panel system.

"There is so much crossover with what local governments require and what our growers require, and when you are doing things at such massive scale you really can get big savings."

WALGA has signalled it would consider allowing other peak not-for-profit organisations aligned with local government to sign on as associate members.

"Preferred supplier panels provide members with substantial discounts on normal market rates for goods and services through the increased buying power of bulk purchasing," WALGA chief executive Ricky Burges said. "We have over 50 preferred supply panels in place and are able to offer access to these supply contracts to other organisations that are eligible for associate membership."

VegetablesWA hopes members will have access to the discounts within a month. It will work with WALGA to expand the scheme to include seed and fertiliser.

About half of WA's vegetable production occurs within about 100km of the metropolitan area, from Gingin in the north to Myalup in the south, with most of the rest coming from Carnarvon and growers at Manjimup, Pemberton and near Albany.

WA is Australia's leading vegetable exporter on the back of demand for carrots, melons, broccoli, cauliflower and seed potato. Carrot exports are worth about $47 million a year, with total vegetable exports from WA hitting $60 million in 2011-12.