ACCC plans to permit Dairy Farmers milk pricing policies following National Foods takeover

Posted by Isobel Drake on 29th September 2008

The Australian Competition and Consumer Commission is proposing to authorise, for five years, milk pricing and milk purchasing policies between DFMC (Dairy Farmers Milk Co-Operative) and ACF (Australian Co-Operative Foods) to enable their continuation following the sale of ACF to National Foods*.DFMC acquires raw milk from its farmer members and sells this milk to ACF for processing into dairy products.

Agreements in place between ACF and DFMC require DFMC to adopt the same price and purchasing arrangements in relation to the purchase of raw milk from its farmer members as ACF applies to its purchase of raw milk from DFMC. The parties wish to continue this pricing agreement following the proposed sale of ACF to National Foods, which was announced last month.

“The ACCC considers that the continuation of the existing pricing and purchasing policies following the sale of ACF will result in a public benefit in the form of transaction cost savings and efficiency gains, as well as providing certainty of supply arrangements, particularly for DFMC farmer members,” ACCC Chairman, Mr Graeme Samuel, suggested.

The ACCC has granted interim authorisation for DFMC to begin to offer and enter into supply contracts with farmers. These contracts will outline the prices farmers will receive for their milk following the completion of the sale of ACF to National Foods.

Submissions on the draft determination are due on 14 October. More information regarding the application for authorisation is available by following the Public registers and Authorisations register links on the ACCC’s website.

*National Foods is still awaiting shareholder approval on their proposed $910 million takeover of Australian Co-Operative Foods – results from the shareholder vote are expected in November.