Inquiry is crucial first step

It was the right move by Deputy Prime Minister Barnaby Joyce to yesterday announce an Australian Competition and Consumer Commission inquiry into the dairy industry.

Mr Joyce made the move at a dairy symposium in Melbourne and his decision comes after milk processing giants Murray Goulburn and Fonterra retrospectively slashed their farm gate milk prices earlier this year, claiming claw-back payments from hundreds of farmers.

Dairy farmers continue to struggle as a result of the price cuts, with some walking away from their farms and selling their dairy herds.

Farmers and others in the dairy industry believe the processors should not have been able to make the claims against farmers and Mr Joyce says the aim of the ACCC investigation is to ensure the situation is not repeated.

It is our belief the processors have placed dairy farmers in an untenable situation created by not only cutting milk prices but also making a claim on payments already made to them.

This is a situation that should be investigated and it is certainly a situation that should not be allowed to occur again.

We have this week seen Murray Goulburn announce a $40 million after-tax profit, at the same time it has promised efficiency improvements and job cuts at its headquarters.

The company has understandably come under pressure to find savings after suppliers complained they have been carrying the burden of poorly performing markets.

THIS IS A SITUATION THAT SHOULD BE INVESTIGATED AND IT IS CERTAINLY A SITUATION THAT SHOULD NOT BE ALLOWED TO OCCUR AGAIN.

Given the events of the past six months, it is not surprising that suppliers would be feeling that way.

There is no doubt the dairy industry will continue to face a challenging global outlook in the near future.

But milk suppliers have always been and will continue to be the key to its success, and preserving their future prospects is paramount.

Yesterday’s symposium was an important step on the path to that future.