Dairyfarmers seek all-clear to form bloc

28 Jun, 2000 11:07 AM
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DAIRY farmers struggling with their lack of market power as a result of dairy deregulation are seeking approval to negotiate the farm gate price for market milk through a collective bargaining system. The Australian Dairyfarmers Federation (ADF) has applied to the Australian Competition and Consumer Commission for the authorisation, to enable farmers to from groups to negotiate contract prices with milk processors. Currently, the Trade Practices Act prohibits individual businesses from forming a bloc to negotiate contracts, as it lessens competition. But, in certain special cases, the ACCC has granted authorisation to indemnify the practice. The dairy industry is seeking to be one of those special cases. Queensland Dairyfarmers Organisation chief executive officer Mick Prendergast said previous regulation of the industry meant the market had no experience in setting a farm gate price for market milk. As a result, there was a real risk that, from July 1, dairy farmers who really should stay in the industry would believe they had to quit it, and others would be forced out. A transition period where collective bargaining could be employed would diminish that risk, he said. The biggest hurdle facing the dairyfarmers' application is the public interest test. The ACCC will only give authorisation if it is satisfied that a reduction of competition will be in the best interests of the general public. Queensland Senator Ron Boswell, who organised a meeting between the ACCC and the ADF, said authorisation would protect the large number of dairy farmers, who as individuals had little market power when negotiating prices. The three to four big supermarket chains were using their market power to pressure the three big market milk suppliers to cut their wholesale price, which in turn was forcing that pressure on to the1500 Queensland dairy farmers, he said, and the producers were powerless to stop it. The same situation was occurring in New South Wales. An authorisation to negotiate collectivly would address some of that imbalance, he said. Major market milk processor Pauls managing director Ray Hill said the milk's short shelf-life placed dairyfarmers in weak negotiating position, too. Pauls had nothing to fear from an ACCC authorisation for collective bargaining, he said, as it had set the highest farm gate price for market milk in the state. "Pauls has a genuine interest in maintaining a viable dairy industry in Queensland, otherwise the supply of milk in the future is doubtful," he said. But Mr Hill did have doubts about whether the ADF application would pass the ACCC's public interest test.

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