ACCC goes soft on retailers to the detriment of farmers and consumers

The NSW Farmers’ Association has highlighted its disappointment at the Australian Competition and Consumer Commission’s (ACCC) Dairy Inquiry interim report.

NSW Farmers’ President Derek Schoen said the competition watchdog’s interim report fell well below the expectations of dairy farmers across Australia.

“This inquiry is a once in decade opportunity to resolve competition issues within the Dairy Industry. If findings of ACCC’s interim report are indicative of the Inquiry’s outcomes, this has been a wasted opportunity.

“Many dairy farmers are operating on wafer thin margins, and this inquiry does nothing to address this.”

In its submission to the Inquiry, the Association noted its disappointment at:

·  the lack of rigour in analysing the various markets for dairy, including poor market definition;
·  ACCC’s tendency to excuse or justify retailer behaviour as being consistent competition and consumer outcomes, even where there is a lack of analysis or evidence to make such claims; and
·  ACCC’s draft recommendations that would only have a marginal impact on improving competitive outcomes within the dairy supply chain.

“We appreciate recommendations calling on farmers to seek professional advice before entering supply contracts, however, the formulation of such recommendations did not require a time-consuming inquiry process.  What we need is some real action against processor and retail market power.”

The Association highlighted its astonishment by the ACCC’s findings a dollar-a-litre milk was good for consumers.

“Let’s dispel this myth that dollar-a-litre fresh milk is good for the consumer. Coles and Woolworths are using fresh milk as a loss leader to get customers through the door, and recouping any lost margin on other grocery items in customers’ shopping trolleys.”

“In a competitive market, a higher retail price for fresh milk should increase margins for not just retailers and processors, but also primary producers.  The fact that these margins are not being shared equitably is a demonstration of the uncompetitive nature of the dairy supply chain.”

The Association has reiterated its support for the ACCC’s focus on agricultural related supply chains.

“Farmers are small business owners who work in a supply chain defined by large powerful entities. As such, we support the ACCC’s focus on agriculture, however, we cannot support the direction of this inquiry,” concluded Mr Schoen. 

Date:  31 January 2018
Contact:   Kathleen Curry  |  Public Affairs Director | 0429 011 690