Dairy wars heat up
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.