Choice weighs in on milk price fight

Posted by Nicole Eckersley on 2nd March 2011

Consumer advocacy group CHOICE says implications of the supermarkets’ milk pricing battle should be seen in the wider frame of competition issues in the grocery sector and the need for a National Food Policy, and has called for a national food policy and supermarket ombudsman to be established.

Milk splashThe consumer group, in a submission to the Senate Economics Committee Inquiry into the milk discount issue, said discounted prices in the short-term may have negative consequences further down the track.

CHOICE said that a clear concern was whether the $1 a litre dairy discount was a sign of healthy competition or of excessive market concentration.

“Consumers do not ‘win’ if heavy discounting in the short term has the effect of reducing product choice or undermining food security in the medium or long term,” said CHOICE director of campaigns Christopher Zinn.

“CHOICE believes that the milk price debate highlights the obvious lack of perspective and understanding surrounding the potential impacts of the growth in major supermarket generic brands and associated issues around future food prices and food security.”

As such, the consumer group is arguing for a whole-of-government approach to a National Food Policy that tackles information and regulatory gaps.

“We believe a more centralised approach is needed to ensure the many and varied players along the food supply chain operate in a coordinated and strategic manner,” said Zinn.

“This would mean decisions affecting the future of Australia’s food industry are coherent and consistent.”

CHOICE also said it wants to see a Supermarket Ombudsman to tackle competition and fairness issues across the grocery sector, effectively sitting within the ACCC.

As CHOICE sees it, the role would involve promoting and protecting competition amongst supermarkets, and would not necessarily require the creation of any new laws, just better enforcement of existing legislation.

“The Ombudsman would provide much needed leadership in reforming the supermarket sector. This is critically important in an industry where the major retail players have well-funded capacities to engage in lobbying and influencing of governments and other regulators,” said Zinn.

Because of the complexity of issues involved in competition throughout the supermarket sector, CHOICE believes a Supermarket Ombudsman would be well  placed to considider every step along the food value chain, and would be able to direct research priorities under a National Food Policy.