ACCC Dairy Inquiry recognises industry imbalances

WAFarmers has welcomed the ACCC’s recognition of imbalances in the dairy industry marketplace, following the release of the final report from its dairy inquiry.

The 240-page report acknowledged two main concerns from dairy farmers; the lack of transparency about contract and pricing practices and the power this gave to processors, and the impact of $1 per litre milk within the dairy industry.

WAFarmers Dairy Section President Michael Partridge said the implementation of a code of conduct to improve contracting practices would be welcomed by industry.

“We fully support the ACCC’s recognition of the imbalances in the marketplace between farmers and processors, and processors and retailer,” he said.

“Producers have very little negotiation power and are mainly price-takers because of the very nature of the product being fresh and perishable.

“Undoubtedly, there are imbalances between each level of the supply chain, and while we hoped there might have been a more detailed analysis of supply chain finances, we welcome the ACCC’s recognition of the importance of a robust Code of Conduct.”

Mr Partridge said the organisation was disappointed by the failure to recognise the loss of income and opportunity along the supply chain through the sale of $1 per litre milk.

“The ACCC has failed to recognise that a reduction in the price of private label milk caused a significant decline in the value of all milk sold, essentially dragging the market down,” he said.

“To say $1 per litre milk does not or will not affect farm gate prices, especially in WA, is flawed and we are frustrated that the report has not detailed how much it costs the supply chain.

“With that value taken out of the supply chain, it has made it harder for processors to invest in manufacturing infrastructure essential to manage seasonal variation and balance milk for the fresh market.

“This lack of investment certainly has a detrimental effect on the price paid at the farm gate.”

ENDS.

All media requests must be directed to WAFarmers Media and Communications Officer Melanie Dunn on (08) 9486 2100 or [email protected].

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