Senate finds consumer advantage outweighs dairy farmer complaints: Supermarkets are winners and grinners (again)!

Posted by AFN Staff Writers on 3rd November 2011

The Australian Senate inquiry into the impacts of supermarket price decisions on the dairy industry has concluded that most Australian dairy farmers “will not be significantly worse off” because of supermarkets cutting the price of milk.

The Senate’s Economic References Committee final report, published today, states that the vast majority of Australia’s milk production occurs in States such as Victoria where a number of processors operate and drinking milk represents a relatively small share of production. According to the report, the majority of these dairy processors focus on export trade.

However, the report also said that in states such as Queensland and Western Australia, the impact of the price cuts is potentially greater as there are few processors operating and milk production is primarily for drinking milk.

The report stated that the January 2011 price cut in a staple product is “undoubtedly good news for consumers in the short term, provided it does not constitute predatory pricing, a retail price cut should not be discouraged.”

In its report, the Senate committee recommended that the Australian Government commission a study of the future sustainability of dairy industries in Queensland, New South Wales and Western Australia.

It also recommended an independent review into the effectiveness of collective bargaining laws and arrangements for agricultural industries, with a view to creating a more equitable balance of power between the negotiating parties.

Final report is a “let-down” for dairy farmers

The Queensland Dairyfarmers’ Organisation (QDO) said the final report from the Senate Economics committee was a let-down for farmers.

QDO President Brian Tessmann said that, instead of action, the bulk of the report focused on suggestions of further studies and reviews.

Mr Tessman said, “The fact is that the supermarkets’ are focused first and foremost on their profits. We know that milk has been used as a marketing agent, while other products have increased in price. So this report, and seemingly the government’s response, is a major disappointment for farmers and consumers.”

Mr Tessmann said that it had taken 266 days, five public hearings, and more than 200 submissions and additional information for the Senate to compile its report, and that it was the second such Inquiry and report in two years.

The Senate report, backed by members of the major political parties, echoes similar sentiments expressed by Canberra-based economists and previous government enquiries into supermarket prices.