Farmers pay for supermarkets’ milk price war

Dairy farmers across the Tasman have been ruined, writes Bruce Wills. What Labour MP Shane Jones told Parliament regarding Countdown will probably not be news to thousands of current and former Australian dairy farmers.

You see, they’re the ones who have footed the real cost of Australia’s A$1-alitre supermarket milk war.

Last May, the head of Coles warned its suppliers Australians were paying too much for groceries at the same time a A$1.5 billion (NZ$1.6b) full-year profit was announced. Several months later Woolworths, its arch rival, revealed a A$2.3 billion net profit. Combined, the two groups were making a net profit of A$7229 every minute. I do not begrudge successful businesses, given many pension funds rely upon success like this. What I do begrudge is if high profits come from breaking smaller businesses through predatory, anti-competitive practices. That is something I see in the Australian dairy industry.

If the 2011 Australian Competition and Consumer Commission (ACCC) investigation into the supermarket milk war is anything to go by, it may leave some people on this side of the Tasman feeling deflated with our Commerce Commission about to look into things. The ACCC found there was no evidence that discounting impacted Australian dairy farmers or that milk was being sold at below cost.

That left some Australian Senators and farming groups stunned.

Only last December, Jane Stanley asked in The Guardian: ‘‘What is wrong with this picture? Domestic and international demand for dairy produce is booming, but the [farm gate] price of Australian milk has declined so far that it is now cheaper than water’’.

A few weeks ago, Australia’s ABC reported that since the supermarket milk price war started, 90 Queensland dairy farms have left the industry. Since 2002, the number of Queensland dairy farms has collapsed by two-thirds.

This makes it hard to cheer Australian supermarkets who wrap themselves in the flag while kicking New Zealand and Australian suppliers in the shins.

Despite this, Federated Farmers is not going to join calls to boycott Countdown or any Australian product. Spitting the dummy on our side of the Tasman plays right into hands of the fake patriotism underpinning ‘‘Buy Australian’’ as a marketing tactic. That reaction is exactly what the marketers want.

What we need is the true blue Australian consumer on our side because they dislike bullies and blowhards. Take that certain underarm incident at the MCG three decades ago.

It remains the only time I have ever heard an Australian crowd boo a winning Australian team off the field.

That’s a clue to how we can turn ‘‘Buy Australia’’ into ‘‘Buy off your mates’’ instead. If there are going to be campaigns, they need to be led by Australians. We need to get Australians saying that they want the best products at the best price. We need Australians to demand choice instead of supermarkets telling them what they’re allowed to buy. We also need Australians to see how deeply cynical the supermarkets are by reinforcing freedom of choice.

This will hit Coles and Woolworths’ market share. That’s the only language they understand.

The last thing we can afford to do is to wind up Australians because we need our mates on our side. We’ve also got more to lose, since Australia is our second largest export destination, but to them, we rank sixth behind India and slightly ahead of Singapore.

On social media, Federated Farmers did elicit this response from Coles: ‘‘just to confirm, we aren’t boycotting NZ products; we have preference for Australian made as this is what most of our customers want’’.

To that we simply replied: ‘‘We think customers want choice’’.

Coles and Woolworths are trying to pitch themselves as true blue Aussie companies. Yet they’ve bulldozed over Australian farmers, those true Aussie battlers. It puts a stark face on the fake patriotism behind ‘‘Buy Australian’’ because it is a marketing tactic. It’s also a tactic that’s come at a mighty cost to Australian dairy businesses and I would guess, many more beside.

Whether this is anti-competitive or simply razor-sharp negotiating only an investigation will determine. It will be interesting to compare and contrast the outcome of our Commerce Commissions investigation with what Australia’s ACCC found, or did not find, regarding milk.

Bruce Wills is the national president of Federated Farmers.

Tatua chairman Steve Allen, left, with author Dr Ian Hunter at Sunday’s book launch at Oak Lane Lodge.