Retailers need to be put under spotlight

By Stephen Cooke

The recent Senate report into the dairy industry failed to adequately address the role of retailers in promoting discounted dairy products, according to the United Dairyfarmers of Victoria.

The Senate report, originally due in February, was granted five extensions before it was finally released last month.

UDV President Adam Jenkins said most of the Committee’s recommendations “reaffirm a lot of the work the dairy industry is already undertaking to improve transparency along the supply chain.”

“However, we do note that the considerable time that was spent talking about retail pricing during the inquiry doesn’t seem to be properly represented among the recommendations.”

The Senate Standing Committee on Economics handed down 12 recommendations, but it is up to the Government to implement them.

Recommendations included:

Dairy processors set conservative opening prices to avoid retrospective price step-downs

Government to ease red tape on existing co-operatives, and to support new co-ops

Australian Competition and Consumer Commission (ACCC) to evaluate effectiveness of voluntary code of conduct

Another report, targeting competitiveness and transparency in the Australian dairy industry, is currently being conducted by the ACCC and due to be handed down in November.

Mr Jenkins said farmers hoped the ACCC would address concerns along the entire supply chain that were absent from the Senate Committee’s report.

The Chair of the Senate committee behind the report, Labor Senator Chris Ketter, described the Government’s decision to implement the ACCC review as a “knee jerk reaction to the Senate inquiry” when he addressed the Queensland Dairyfarmers’ Organisation conference last month. However, he said the ACCC investigation would be worthwhile.

Senator Ketter said he was looking forward to the ACCC coming to grips with the “power imbalance” between dairy farmers and processors, and said the ACCC needed to make it easier for farmers to collectively bargain, to upskill co-operative groups, and to reduce costs involved in arbitration.

He said because of his union background: “I understand what mongrels Coles and Woolworths can be.”

He suggested the industry should drive a public education campaign to assist consumers in buying branded milk.

“It makes me sick to see Coles and Woolworths pretend to be best friends of the farmers with what they’re doing when in reality not much of that is going back to the industry as a whole.”

He said processors and retailers were “working hand in hand” against the interest of farmers.

“Retailers have the power of setting $1/litre milk but you have processors willingly going along with that. This wasn’t definitively shown in the inquiry but we had lots of submissions that suggested that processors, in order to get other products on shelves in retailers, were prepared to go along with the dollar milk in order to get other products on the shelves.

“There’s a lot of work to be done and ACCC is the right body to look at all those factors. I have confidence they have right expertise and integrity to look at it. We’re looking forward to the ACCC coming to grips with this and then the Government coming on board.”