THE Federal government’s response to last year’s Senate inquiry into the supermarket milk pricing war has been slammed by the Australian dairy industry and Federal politicians wary of Coles’ and Woolworths’ market dominance.
In its response tabled last week, the Federal government suggested it didn’t believe the Competition and Consumer Act 2010 should be reviewed until the ACCC has had the opportunity to further test the law in the courts.
But Independent South Australian Senator Nick Xenophon attacked the government’s response saying its “wait and see” tactic would have dire consequences on the fresh milk market.
“Last year, then-Woolworths CEO Michael Luscombe said this was an unsustainable price war,” he said.
“How many more producers have to walk off the land before this government will take action against the big supermarkets?”
He said while the government may be confident in ACCC’s ability to enforce the law, he believes the law is “grossly inadequate” when it comes to protecting dairy farmers from the two big supermarkets.
Senator Xenophon renewed calls for the establishment of a Supermarket Ombudsman to assist dairy farmers in their dealings with milk processors and milk processors in their dealings with retailers.
He said the trouble with unsustainable discounting is that the short term gain will be followed by long term pain for farmers and ultimately consumers.
“It seems the Government is waiting until the cows come home before acting to protect Farmers,” he said.
“The trouble is, the cows won’t have a home to go to if more farmers walk off the land.”
Shadow Agriculture Minister John Cobb said Labor had ignored the dairy industry.
He said it was obvious the Competition and Consumer Act needed reviewing to ensure small businesses - including farmers - were protected against the anti-competitive behaviour of “big corporates”.
“The ACCC needs ongoing powers to monitor the prices, costs and profits relating to the supply chain of major foodstuffs to ensure the facts are available and a lack of evidence cannot be used as an excuse,” he said.
Australian Dairy Farmers (ADF) president Chris Griffin said he was “amazed” the Government was satisfied with the ACCC’s monitoring when it had admitted it had not monitored any of the approximately 15,000 other items in a supermarket that Coles may be increasing the price of, to offset the price cuts on staples such as milk.
“Coles’ actions have already contributed to the loss of some 30 dairy farmers from the industry in Queensland since January 2011 and more are set to leave with farmers being confronted with lower contract prices and major cuts to their incomes over recent months.
“Farmers in Qunnesland and NSW are having to sign contracts at three cents per litre less than last year - for many dairy farmers this means they will become unprofitable.”
Mr Griffin supported calls for a Supermarket Commissioner or Ombudsman to be established to investigate complaints and strongly enforce the new code.
NSW Nationals Senator John Williams said an ombudsman was needed with sufficient powers to allow farmers to provide details of where and how they are losing profits and income, at the expense of the two major retail chains.
He said Coles and Woolworths had too much market power and having an ombudsman was critical for protecting farmers’ interests against any abuse of those powers.
“During the Senate inquiry last year, Coles made the point that the dairy farmer would not cop the brunt of the price reduction and that Coles would suffer themselves but that proved to be wrong,” he said.
“A lot more milk is being sold at the cheaper price, the generic brand, hence dairy farmers are getting a lot more of their Parmalat contracts being sold at 44c a litre instead of 58c a litre.
“We need an ombudsman with powers so the farmer can go to the ombudsman and say, ‘Here are my books, this is what it costs me to produce the product, like milk, this is what I’m selling it for and this is how I’m now losing money.
“My problem is with the purchasing power of the two big supermarket chains – they are in a very powerful position.”
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