ACCC agricultural commissioner Mick Keogh, in his final report on the issue, said there was no evidence that supermarkets were trying to manipulate the farm gate price by selling cheap milk.
“We understand that farmers are incensed because it devalues the work they do and the value of their product, but aside from that we think it is a bit of a distraction in terms of what’s happening in the industry more generally,” Mr Keogh said.
Matthew Trace, vice president of the Queensland Dairyfarmer’s Organisation (QDO), said cheap milk puts “intolerable” pressure on farmers.
“Dollar-a-litre milk has had a devastating effect on our industry [and] it is clearly the problem,” he said.
David Williams from the Hunter Dairy Development Group, said the ACCC should have focussed on the supermarkets.
“They drive the prices down unreasonably and the processors have no choice but to accept the terms and conditions the supermarkets impose on them.”
Terry Richardson, president of Australian Dairy Farmers said the industry was losing millions as a result of cheap milk.
“Selling milk as a loss leader at the rear of the supermarket, at price points cheaper than water, is not in the long-term interest of this industry,” Mr Richardson said.
“Once the money departs the supply chain, it is never returned.”
Mr Keogh said he wanted action on a mandatory code of conduct in the dairy industry, despite processors preferring to develop a voluntary code.
He said it would reduce the power imbalance between farmers and processors and help to “change the culture of behaviour”.
Dairy processors say a voluntary code with an independent mediator is all that is required to safeguard farmer’s interests.
That is not enough for New South Wales dairy lobby group Dairy Connect, however.
President Graham Forbes, a Norco supplier from Barrington, said the Federal Government should implement a mandatory code.
“I think most of the organisations that represent dairy farmers throughout Australia are in support of a mandatory code,” he said.
He said a voluntary code was not adequate.
“We need stronger arrangements between farmers and processors to correct the imbalance of power.”
Mr Forbes said the processors have had enough time to establish a voluntary code and it was up the Federal Government to impose one.
“If they can’t sort out a voluntary code of conduct in two years well they’re probably not worth the money they’re getting paid,” Mr Forbes said.
South Australian Dairy Farmers Association president, John Hunt, agreed that tougher rules were needed to protect farmers and a voluntary code was not enough.
“There’s no recourse if a processor does breach the code, so they can basically, if they want to, they can ignore it,” Mr Hunt said.
“The processors have also cried poor, but farmers have not had any mechanism to see if they were telling the truth.”
He said recommendations about negotiating in good faith and improved transparency would help farmers see “if they are being taken, or not”.
The ACCC has sent its report to the Federal Government for a response.
Source: ABC Rural