ACCC Interim Report Highlight Problems Faced By Dairy Farmers

ACCC Interim Report Highlight Problems Faced By Dairy Farmers

Senator for Victoria Bridget McKenzie

Dairy Farmers Problems Highlighted In ACCC Interim Report

Victor P Taffa

Nationals Senator for Victoria, Bridget McKenzie has welcomed the release of the ACCC Interim Report into the dairy industry released today.

“Importance of this Interim Report is demonstrated by the fact that the dairy industry in Australia employs more than 42,000 people; it is the country’s third largest rural industry with more than $3.6 Billion in farm gate production in 2026-17.” Senator McKenzie said.

“It was initiated by then Agriculture Minister Barnaby Joyce after a meeting with dairy industry leaders and followed retrospective cuts to farm gate milk prices in the 2015-16 season.”

“As a result of that meeting, the ACCC set up its Agriculture Consultative Committee.”

“It initially held an inquiry into the beef industry which also bought about positive measures of improvement.” Senator McKenzie said.

“This Interim Inquiry into the Dairy Industry highlights problems that are not news especially for dairy farmers but it does set the scene for all interested parties to provide feedback to the ACCC.”

“Dairy farmers have been telling me for some time that the biggest problem in their industry is the bargaining power imbalances between farmers, processors and especially supermarkets.”

“Currently, the system is skewed in favour of the large, dominant supermarkets and processors, farmers must get a better deal whether they are producing for global or domestic markets.” Senator McKenzie said.

Interim Report findings and recommendations include:

  • Reducing the number of documents and clarifying the terms and conditions in milk supply contracts.
  • Ensuring milk supply contracts do not include terms which unreasonably restrict farmers.
  • Establishment of a dispute resolution framework for farmers and processors.
  • Encouraging farmers to consider legal and financial implications when entering into a contract with a processor.
  • Improving the transparency of processor contract pricing terms.
  • Strengthening the current Voluntary Industry Code in the short term, while considering a mandatory dairy industry Code of Conduct, under the Competition and Consumer Act 2010.

“As the report points out, overly complex milk supply contracts and price offers, delayed loyalty payments and price announcements don’t give farmers enough time to compare alternative offers and switch for a better deal.” Senator McKenzie said.

“Reforming these practices would strengthen competition at the farm gate. There are inherent bargaining power imbalances in the industry especially between processors and farmers. Farmers deserve and should get a better deal.”

“It is vitally important that farmers and others in the industry make a submission to the ACCC on its Interim Report by the end of January.” Senator McKenzie said.

Dairy Inquiry Final Report will be released on the 30th of April, 2018.

Abbreviations

ACCC             Australian Competition and Consumer Commission