Legal action on dairy firm

THE competition watchdog’s launch of legal action against the nation’s largest milk processor, Murray Goulburn, highlights the need for better transparency in supply contracts, Tasmanian farmers say.

The Australian Competition and Consumer Commission alleges Murray Goulburn engaged in unconscionable conduct and made false or misleading representations in contravention of the Australian Consumer Law, alleging it made false or misleading claims over farmgate prices.

Tasmanian Farmers and Graziers Association dairy council chairman Andrew Lester said the TFGA and Australian Dairy Farmers had been advocating for about 15 years for better transparency in sup- ply contracts. “It’s in line with the farming fraternity’s call for a code of conduct, voluntary or otherwise, to apply to milk processors,” Mr Lester said. The proceedings allege between June 2015 and February 2016, Murray Goulburn misled farmers by claiming the forecast final farmgate milk price of $6.05/kg for milk solids was the most likely outcome for the 2015-16 financial year, when that was not in fact the case.

The ACCC also alleges that from February 2016 until April 2016, it further misled farmers by representing it had a reasonable basis for expecting to be able to maintain its opening price of $5.60/kg for the rest of the season.

Murray Goulburn said in a statement it acknowledged the ACCC proceedings. ACCC chairman Rod Sims yesterday said farmers relied on Murray Goulburn’s representations and were not expecting a substantial reduction in the farmgate milk price so close to the end of the season.

The commission is continuing its broader investigation into the dairy industry and will report back to Treasurer Scott Morrison in November. A separate Senate inquiry into the issue will present its report to Parliament on May 11.

Murray Goulburn’s former managing director Gary Helou told a Senate hearing in April last year that he didn’t mislead farmers about the farmgate price, saying the company acted on the best information available at the time.

The watchdog is not taking action against Fonterra over its farmgate milk price because it was more transparent about the risks.