Dairy wars heat up

Townsville Bulletin - - Investor -

DAIRY f a r mi n g g r o u p s have crit­i­cised su­per­mar­ket gi­ant Coles for ini­ti­at­ing deep cuts to the price of milk, say­ing it will dam­age the dairy in­dus­try, hurt small busi­ness and re­duce con­sumer choice.

Dairy farm­ing rep­re­sen­ta­tives ap­pear­ing be­fore a Se­nate in­quiry into the dis­count­ing of milk prices by ma­jor su­per­mar­ket chains also said that milk prices were un­likely to stay low and would prob­a­bly rise once the ma­jor su­per­mar­kets had grabbed mar­ket share from com­peti­tors.

They also say that gov­ern­ment in­ac­tion is al­low­ing t he big su­per­mar­kets – Coles and Wool­worths – to abuse t heir power, and called upon the competition watch­dog to in­ves­ti­gate.

The Se­nate Eco­nom­ics Com­mit­tee’s in­quiry into milk dis­count­ing be­gan hear­ings in Mel­bourne yes­ter­day.

The com­mit­tee is ex­am­in­ing the im­pact of de­ci­sions by Coles, Wool­worths, Aldi and Franklins to slash the price of milk and the con­se­quent ef­fect on the dairy in­dus­try.

In Jan­uary, Coles slashed the price of Home Brand milk to $ 1 a litre, forc­ing r i v a l W o o l w o r t h s a n d smaller su­per­mar­ket chains to do the same.

Dairy groups say that the dis­counted re­tail prices will even­tu­ally lead to re­tail­ers

MILK MONEY: Farm­ers have crit­i­cised Coles and Wool­worths for cut-price milk de­ci­sion pay­ing lower prices to milk pro­ces­sors and milk pro­ces­sors pay­ing less to dairy farm­ers.

A u s t r a l i a n D a i r y F a r m e r s ’ ( A D F ) v i c e - pres­i­dent Adrian Drury told the Se­nate com­mit­tee there was an ur­gent need for Coles to stop the dis­counti n g b e c a u s e i t w o u l d ul­ti­mately dam­age dairy farm­ers’ abil­ity to pro­duce milk prof­itably.

‘‘ We urge the ACCC ( Austr al i an Competition and Con­sumer Com­mis­sion) to in­ves­ti­gate the pric­ing ac­tiv­ity of Coles,’’ Mr Drury said.

A s k e d w h e t h e r t h e r e should be a floor on the price of milk, Mr Drury said: ‘‘ We’re not ask­ing for reg­u­la­tion. We’re ask­ing for a fair and com­pet­i­tive go.’’

Dairy Farm­ers Milk Co­op­er­a­tive chair­man I an Zand­stra said the is­sue at h a n d w a s t h e A C C C ’ s abil­ity to deal with the power of the ma­jor su­per­mar­ket chains.

S o u t h A u s t r a l i a n Dairyfarm­ers’ As­so­ci­a­tion chief ex­ec­u­tive Ken Lyons called for the fed­eral gov­ern­ment to strengthen the pro­vi­sions of the Trade Prac­tices Act and en­sure the ACCC has ad­e­quate pow­ers to over­see a com­pet­i­tive gro­cery mar­ket in this coun­try.

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