The United Dairyfarmers of Victoria is pushing for action to address power imbalances between milk processors and supermarket retailers following the release last Thursday of the Australian Competition and Consumer Commission (ACCC) interim report into the dairy industry.
The report identified issues and offered recommendations on fixing the lack of bargaining power given to farmers when negotiating supply contracts with processors, but UDV President Adam Jenkins said the competition watchdog hasn’t gone far enough.
"Retailers have a huge amount of power creating an unfair balance in which processors are being squeezed dry of profits,” Mr Jenkins said.
“The ACCC has repeatedly acknowledged this issue in the report, but has come up short on making any recommendations to fix this problem, other than to say that it would make no difference to farmers.
"As a farmer, I can tell you there's no point in sorting out one power imbalance along the dairy supply chain unless every imbalance is sorted, but there is not a single processor in Australia that will speak out against the duopoly of Coles and Woolworths for fear of retribution.”
Among the report’s recommendations was that the dairy industry consider implementing a mandatory code of conduct, despite the industry unveiling a voluntary code earlier this year.
Mr Jenkins said the voluntary code had already gone some way to addressing unfair contract terms between farmers and processors.
“The voluntary code was developed by industry upon advice from Government, ACCC and the Small Business Ombudsman that industry issues are best addressed, wherever possible, by industry,” he said.
“We have already seen a positive impact on contract terms offered to farmers because of the code, but there could be more done to hold processors to account, as recognized by the ACCC.
“It was an important first step in our process of improving the balance of power in the supply chain and the ACCCs analysis will be incorporated into our already established review process.”
Mr Jenkins said farmers now hoped the competition watchdog would address concerns along the entire supply chain in its final report.
“We’re pleased that the interim report confirms issues the dairy industry knew existed, but it is disappointing that it falls short on offering solutions for the entire supply chain,” he said.
“We look forward to unpacking the final report and further consulting with members to prepare for our formal response in January.”