Inquiry hears of Woolworths' 'ullage'

MOST packaged food suppliers pay Woolworths for damage and loss of its product not up to scratch for sale.

But a Senate inquiry on Tuesday heard the grocery giant did not treat all companies the same.

Woolworths trade relations head Ian Dunn came under sustained questioning from Senator Sean Edwards, who also declared he was a wine producer supplying the company.

Mr Edwards asked how "ullage", a term for damaged good losses, was calculated and whether food suppliers or the retailer paid such costs.

Mr Dunn said as food manufacturers were responsible until it reached the store, they paid ullage in lieu of Woolworths then invoicing them for goods not fit for sale.

But when asked if every single supplier paid the universal cost, Mr Dunn admitted not every company paid the cost.

"What it means is that we will not either of us have any additional administrative costs such as when labels might fall off," he said.

Mr Edwards said: "So if you're a really good negotiator with a product that you can't get hold of - and that supplier says to you we won't pay that charge, you say okay".

He said it was "just another way to claw back a margin from a supplier".

"So it's a supply mechanism, it's not actually about wastage in your warehouse," Mr Edwards said.

Mr Dunn said in each negotiation, the company would look at the market for the product and determine what conditions, such as ullage, would be placed on contracts with suppliers.

The inquiry continues. It will report its findings to parliament by June 30.

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