ACCC decision no surprise to farmers

29 Jul, 2011 04:00 AM
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Peter Evans did not expect things to improve when the senate milk inquiry completed its final report in October.
Peter Evans did not expect things to improve when the senate milk inquiry completed its final report in October.

WA dairy farmers have reacted with little surprise at the Australian consumer watchdog's findings that supermarkets discounting milk did not breach competition regulations.

Last Friday, the Australian Competition and Consumer Commission (ACCC) ruled cheap home-brand milk at Coles did not represent predatory pricing.

The ACCC found Coles' objective in reducing prices had been to increase its market share and was consistent with what it expected to find in a competitive market.

ACCC chairman Graeme Samuel said supermarkets had slashed their own profit margins rather than hurt dairy farmers.

WAFarmers dairy section president Peter Evans said Coles checked with the ACCC before it started the discounting strategy and would have known it was in the clear in respect to predatory pricing.

However, he believed, the line of inquiry was very narrow and did not mean dairy farmers had not been affected.

"Just because the ACCC says it's not predatory pricing doesn't mean there's no damage being done," Mr Evans said.

He said some farmers had lost about $8000 over 12 months due to reduced milk sales.

"All the other companies that are in the liquid milk market would be feeling exactly the same effects so even though it's not as obvious, it must affect the money paid to farmers," Mr Evans said.

He did not expect things to improve when the senate milk inquiry completed its final report in October.

"Things will only change if the government decides to act on that report," Mr Evans said.

"And they are under no obligation to actually do that.

"If the Senate report finds against Coles, then it gives us more leverage against the government but it doesn't actually force them to do anything."

Mr Evans said the legislation should be toughened up so the ACCC could act, as all agricultural commodities were vulnerable to retail chain strategies.

"It's not just a dairy issue, it's just that dairy's one of the things being hit first," he said.

Mr Evans said if processors moved towards a split-pricing arrangement, it would affect individual farmers differently.

"A young farmer that's debt-laden who wants to expand would be negatively affected by it but for someone who's entrenched and stable, it wouldn't necessarily have the same negative effect," Mr Evans said.

He said the flagged extra electricity costs flowing from the carbon tax just added to dairy farmers' pressures.

"It's all a negative influence at the end of the day," Mr Evans said.

"If there's no money, some farmers will go out of business, some won't, but at the end of the day, total milk production in this State will fall."

He said if the consumer wanted milk, eventually they would have to pay for it.

"While contract prices had been decided up to December, processors had not given a definite price after that," Mr Evans said.

"If there's no milk, they might have to rethink it."

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