Woolworths is a strong supporter of competition in the retail market. Competition helps to keep prices low for customers and drives retailers to provide better products and services. The food retail sector in Australia and New Zealand is competitive, particularly given the number of new market entrants and growth in the number of independent and specialist retailers in recent years.

The ACCC inquiry completed in 2008 into the competitiveness of retail prices for standard groceries investigated a number of issues, including the ability of independent supermarket operators and smaller retailers such as butchers, bakeries and greengrocers to compete with major supermarket chains. The inquiry found that, "viewed overall, supermarket retailing is workably competitive" and noted that the most significant factor in the nature of competition is the high cost of setting up large-format, one-stop-shop supermarkets.

There is a popular perception that Woolworths dominates the retail food market. However, research undertaken for the Roy Morgan Supermarket Monitor (August 2008-July 2009) found that, for Woolworths customers, 68% of weekly spending on fruit and vegetables takes place outside of Woolworths - at fruit shops, markets and other supermarkets.

Australia is a net agricultural exporter, with around two-thirds of its total production sold overseas. Australian farmers produce food for export to other countries as well as for other Australian retailers, wholesalers, manufacturers and food service businesses. We buy a relatively small proportion of total domestic production. In 2007, 12% of the fruit and vegetables grown in Australia were sold at Woolworths, 6% of Australia's beef and 15% of Australia's lamb.

In 2008, our market share of food and liquor retailing in New Zealand was estimated to be about 28% (estimated by Concept Economics from publicly reported information).

Across our business, we abide by voluntary codes of conduct in supplier trading relationships. We were an inaugural member of the Produce and Grocery Industry Code of Conduct, a voluntary code aimed at promoting fair trading practices and building better business relationships. The code also provides access to a simple and accessible dispute resolution procedure for individuals or groups in the event of a dispute.

Fresh food is our business and we have made it our mission to partner with the very best farmers and growers in Australia. We have hundreds of direct trading relationships with fruit, vegetable and meat suppliers.

We are committed to domestic sourcing. Our preference is to have direct, long-term trading relationships. The benefits of working this way are better quality management, improved planning and forecasting, and greater consistency and sustainability of supply. More than 80% of our suppliers have been partners for more than 10 years. We do, however, from time to time buy small quantities of produce in the wholesale markets so we can pass on special offers to customers. By working this way we can find great specials for customers and help suppliers to clear their stock.