THE affect of $1-a-litre supermarket milk and unfair trading and contracts between farmer and milk processor are two of 11 dairy industry areas being investigated by the national competition watchdog.
The Australian Competition and Consumer Commission (ACCC) released on Tuesday a wide-ranging dairy inquiry issues paper seeking public submissions addressing those 11 areas and any other industry concerns.
The ACCC is specifically seeking feedback on the level of competition between processors for raw milk and the ability of producers to switch processors, on different types of contracts used in the dairy supply chain, and on concerns about anti-competitive conduct, unfair trading practices and unfair contracts.
It is seeking feedback on how farm-gate milk prices are set and communicated, availability of market information and pricing signals, and domestic supply chain influences including major supermarkets and $1-a-litre milk.
The ACCC is also seeking comment on dairy export issues, including options for products and markets and any barriers to export trade.
Finally, it wants feedback on "key factors influencing the profitability of dairy farms, including costs of production".
The deadline for submissions is December 12.
The dairy issues paper is the first step in a 12-month inquiry called for by the federal government in response to milk over-supply and farm-gate pricing crisis situations in WA, Victoria, South Australia and Tasmania.
In WA, dairy farmers Graham Manning and Dale Hanks were forced out of the industry in the past month when Brownes Dairy dumped them.
Tony Ferraro is still fighting to stay in the industry and tipping out his milk when he cannot find a buyer for it on a day-to-day basis, and a fourth farmer had to accept a significantly reduced price to continue supplying.
Another five WA farmers face the prospect of leaving the industry in January when Harvey Fresh owner Parmalat stops collecting their milk.
In the issues paper the ACCC acknowledged WA faced specific problems.
"Other issues that have been raised with the ACCC included the oversupply of milk in WA, concerns about practices affecting the renewal of milk supply agreements and continued concern about retail drinking milk prices," it stated.
The ACCC confirmed its inquiry, which officially started on November 1, is separate from one it is already conducting into whether eastern States processors Murray Goulburn and Fonterra Australia "engaged in false, misleading or unconscionable conduct in breach of the Competition and Consumer Act 2010".
It noted a Senate Economics References Committee is also inquiring into Murray Goulburn's behaviour, legality of retrospective elements of milk contracts and other related matters and is due to report by February 24.
The issues paper pointed out from Saturday a new law will protect small businesses from unfair terms in standard form contracts.
"Many farmers are likely to be small businesses and a milk supply agreement is likely to be a standard form contract," the ACCC said.
"The law aims to address some of the power imbalances existing in business-to-business transactions."
The ACCC said it intended holding public forums later at dairy centres around Australia to hear first-hand from people in the industry.
The inquiry will conduct formal hearings where sworn testimony will be accepted.
"The ACCC is seeking feedback from interested parties on issues across all product and geographical markets in the Australian dairy industry," ACCC chairman Rod Sims said on Tuesday.
"This inquiry will closely examine the key competition and fair trading issues affecting the dairy industry.
"As a formal inquiry, the ACCC will also have the ability to compel information from parties including processors and retailers.
"Our aim is to present a really clear picture of the issues facing the market today, and make any recommendations to ensure it remains fair and competitive."
Mr Sims said the ACCC must provide its final report to Treasurer Scott Morrison by November 1, 2017.
The dairy inquiry issues paper is available on the ACCC website.
Submissions can be emailed to dairyinquiry@accc.gov.au.
To have questions answered or to provide information over the phone contact Amy Bellhouse, at Amy.Bellhouse @accc.gov.au, or on (03) 9290 1997, or Mark Laybutt, at Mark.Laybutt@accc.gov.au or (02) 6243 1280.
Mal Gill
Wool and dairy writer for Farm Weekly.
Wool and dairy writer for Farm Weekly.
