Price finding ‘weak’

By Country News

The Australian competition watchdog’s contention that the rise of $1/litre milk has ‘‘no direct relationship’’ between retail private label milk prices and farm gate prices has drawn the ire of many in the dairy industry who have accused the watchdog of failing to take concerns seriously.

The comments come following the release of the Australian Competition and Consumer Commission’s report into the dairy industry, which highlighted power imbalances between dairy farmers, processors and supermarkets.

Katunga dairy farmer Daryl Hoey said the ACCC had shown ‘‘weakness’’ in its reluctance to go after supermarkets.

‘‘For the ACCC to argue there’s a lack of bargaining power between processors and dairy farmers and then be unprepared to tackle the supermarkets with the same pressure is just ridiculous,’’ Mr Hoey said.

UDV president Adam Jenkins was also critical of the final report’s reluctance to address the power imbalance between retailers and processors.

‘‘It doesn’t matter whether or not revenue gained from the removal of discount products would return directly to the farm gate, the value would still be captured by the supply chain,’’ Mr Jenkins said.

The report found processors typically offset lower margins on $1/litre milk with the higher margins earned on branded products, while dairy farmers tended to achieve consistent payment regardless of the final product type.

‘‘This suggests that measures to improve the bargaining power of farmers in their interactions with processors are a more appropriate mechanism to ensure the pricing policies of retailers do not cause undue long-term harm to the industry,’’ the ACCC report said.