PRIME Minister Tony Abbott says the Agricultural Competitiveness White Paper’s $11.4 million investment in boosting the Australian Competition and Consumer Commission’s (ACCC's) agricultural expertise is all about ensuring market competition is “free and fair”.
As revealed by Fairfax Agricultural Media in early May, the White Paper delivered new measures to enhance the competition watchdog’s capacity to assess transparency and competition concerns in specialised agricultural markets or supply chains.
This followed criticism of the ACCC’s move not to oppose the $3.4 billion sale of GrainCorp to US multinational Archer Daniels Midland, which Treasurer Joe Hockey eventually rejected.
The Commission was also slammed by NSW Nationals Senator John 'Wacka' Williams and other government members for being out of touch with specific market issues, when approving the recent JBS Australia takeover of the Primo Group, despite concerns about diminished competition.
Pricing transparency issues with the major supermarkets selling milk at $1 a litre has also worried farm groups in recent years and raised calls for tighter scrutiny of market power arrangements.
Mr Abbott said in delivering the new ACCC agricultural agency, via the White Paper, his government wanted to assure farmers and everyone in the agricultural sector that “we are serious about ensuring that competition is free and fair”.
“It will help the ACCC to become more familiar with market issues in the agricultural sector and a commissioner with a specific agricultural brief, with specific agricultural expertise obviously is going to bring a whole lot of insights which might otherwise not have been there," he said.
“I don't want people to think that the only sector which is subject to market power (abuse) is agriculture.
“All sectors from time to time are subject to a degree of, if you like, corporate overreach and it's important that all sectors are appropriately policed.
“But what we want to see is more expertise, more insight and more focus on the agricultural sector.”
Agriculture Minister Barnaby Joyce said the new ACCC Agricultural Enforcement and Engagement Unit would add to the corporate knowledge of agriculture in a market where centralisation has reduced market forces in many industries.
Mr Joyce said it was extremely important the ACCC had the proper skill sets needed to assess competition concerns relevant to the farm sector.
He said the new Agricultural Commissioner would assist with assessing deals like the JBS purchase of Primo, and “all those peculiar nuances that you wouldn't expect to know unless you were in the industry”.
“To know not whether they kill cattle but what type of cattle they kill and (whether) it might only be a small number overall but is it a large section of a particular market - these skills I think call for an ACCC commissioner (and) I'm glad that this White Paper delivers.”
Mr Joyce said the government’s initiative would enable ACCC staff to attend saleyards or visit farmers to see the market in action and gather necessary evidence.
The Australian Dairy Industry Council also welcomed the appointment of an Agricultural Commissioner saying it would assist with creating a stronger business environment and help foster a more competitive environment throughout the supply chain.
But Australian Farm Institute executive director Mick Keogh said the proposal to increase the ACCC’s funding to improve its understanding of agriculture, would be of little benefit unless the root cause of many of the associated issues, like the lack of market transparency in concentrated markets, was addressed.
“As the milk wars and the Coles supermarket case have demonstrated, without market transparency, it is very difficult for a regulator to get to the bottom of illegal activity by dominant players,” he said.
Shadow Agriculture Minister Joel Fitzgibbon disagreed with most aspects of the White Paper but said the move to strength the ACCC’s powers “can only be a good thing”.
“I don’t agree that the ACCC doesn’t have expertise now but if you want to put a hat on someone that is a welcome thing,” he said.
“It’s not a lot of money but there is a certain inequality between the power of the retailers for example and many of our farmers and growers.
“Any cop we can put on the beat to deal with that problem will be a welcome thing.”
ACCC acting chair Delia Rickard said the ACCC would prioritise detecting, deterring and taking action against conduct that breaches the Competition and Consumer Act 2010 (CCA) that affects farmers and small businesses in rural and regional areas, particularly cartels, misuse of market power and misleading or unconscionable conduct.
She said the government’s announcement gave the ACCC additional resources, but not new powers.
The ACCC already has powers under the CCA and currently prioritises truth in labelling, cartels and unlawful arrangements that have the purpose or likely effect of substantially lessening competition, she said.
“We will continue to use our existing powers to examine issues in the agriculture sector,” she said.
“The ACCC will strengthen its engagement with agricultural industries to understand factors effecting competition in rural and regional markets.
“This will also enable the ACCC to better explain its decisions to farmers and regional small businesses.”
“Through the collective bargaining authorisation process, the ACCC has a long record of strengthening the position of growers and processors across a range of sectors including dairy, poultry, vegetables and seafood.
“The ACCC has long recognised the importance of the agriculture sector to the Australian economy and understands that there are unique and challenging circumstances affecting industry participants.
“We will continue to promote potential pro-competitive strategies to enhance efficiencies and bolster productivity, such as collective bargaining by regional and rural businesses.”