^{This article was co-written with Fiona Whitworth.}

Victoria is Australia’s biggest producer of fruit and vegetables. Annual production, measured at the farm gate, is worth well over $3 billion.

The route this produce takes, from grower to Victorian consumer, is not well understood. We have pieced together information from a wide range of published and private sources to develop a better picture of this supply chain.

About 62% of Victorian fruit and vegetable growers' output reaches households in the State through supermarkets, independent retailers, hospitality businesses, and the kitchens of institutions like hospitals and prisons. Most of the balance of the State’s fruit and vegetable production goes to food processors and manufacturers, such as canneries, condiment makers, and producers of pre-prepared meals and ingredients. Together these account for 30% of total fresh produce output. The remaining 8% is exported to interstate and international customers.

Around half (we estimate 48%) of Victorian-grown produce destined for preparation in the State’s domestic, hospitality and institutional kitchens is purchased directly by the supermarket chains, Woolworths, Coles and Aldi, for sale to final customers. Typically, no intermediaries are involved in this part of the supply chain. Supermarkets deal directly with producers, stipulating an often rigorous set of standards for range, quality, and volume of deliverable produce.

Wholesalers distribute the other half of Victorian produce to households, hospitality businesses, and institutions. They are based at the Melbourne Market, a government-owned corporation established under legislation that dates back to the 1870s.

Melbourne Market is Australia's only remaining State-owned wholesale produce market. It operates from a purpose-built facility on a 67-hectare site in Epping, about 30 kilometres north of the Melbourne CBD, after relocating from its West Melbourne premises in 2015. According to Melbourne Market’s website, “over 2,000 individual fruit and vegetable buyers, representing independent greengrocers, supermarkets, restaurants and food processors, source their produce direct from the Market. Many more receive deliveries and consignments from the Market” [1].

Our research indicates that 45% of the produce distributed via the Melbourne Market goes to independent retailers. These include franchise and fully independent supermarkets such as IGA, municipal retail markets such as Queen Victoria Market, South Melbourne Market and Dandenong Market, high street greengrocers and branded local ‘fruit barns.’

Notwithstanding their direct supply links with producers, the big supermarket chains also use Melbourne Market to supplement their stocks. Around 35% of the produce distributed via Melbourne Market goes to these major retailers.

Much of the remaining produce sold via the Melbourne Market is taken up by ‘provedores’ who act on behalf of customers, mainly in the hospitality and institutional sectors such as restaurants and cafes. The provedores negotiate supply deals with wholesalers for these customers, fulfilling regular or standardised orders from these businesses and institutions.

Around 17% of the produce distributed via the Melbourne Market goes to provedores. The final 3% is purchased directly by hospitality and institutional kitchens.

Our investigation demonstrates that Melbourne Market is a key piece of infrastructure in Victoria’s food distribution system. Half of all locally grown fresh fruit and vegetables consumed by Victorians at home, in restaurants, pubs and cafés, or in institutional kitchens passes through Melbourne Market. Almost a third of Victorian fruit and vegetable growers' total sales occur via the Melbourne Market.

The Melbourne Market is essential to the competitiveness of independent retailers and, therefore, an important counterweight to the State’s (and Australia’s) supermarket duopoly.

The Melbourne Market provides a vital outlet for small, niche or occasional producers. These growers typically have production models that are not compatible with the volume and other requirements insisted upon by the major supermarket chains. They need to get their produce to consumers some other way. Only a few have the capacity to support direct sales to the public or generate sufficient income through farmers' markets and the like. This leaves the Melbourne Market as a key driver of diversity and innovation in the Victorian horticultural sector.