Inquiry into Australia’s dairy industry to look at competition between processors

An inquiry into Australia’s dairy industry will see competition between milk processors, contracts between processors and farmers, global supply markets, and the profitability of dairy farms examined.

The Australian Competition and Consumer Commission (ACCC) has launched a 12-month inquiry into the dairy industry, which it has been directed to carry out by the Australian Government.

Other issues which are to be examined include the availability of price and other market information and the effect of private label products, including pricing, on the industry.

ACCC Chairman Rod Sims has said that the ACCC is seeking feedback from interested parties on issues across all product and geographical markets in the Australian dairy industry.

This inquiry will closely examine the key competition and fair trading issues affecting the dairy industry.

“As a formal inquiry, the ACCC will also have the ability to compel information from parties including processors and retailers.

“Our aim is to present a really clear picture of the issues facing the market today, and make any recommendations to ensure it remains fair and competitive.”

Commissioner of the ACCC, Mick Keogh, said that the ACCC will hold public forums in a number of dairy producing regions so it can speak with dairy farmers about their concerns, and it will release further information about these forums in the coming months.

The ACCC has been tasked with providing its final report on its inquiry into Australia’s dairy industry to the Australian Treasurer by November 1, 2017.

Separate to this inquiry, the ACCC is also continuing to investigate issues relating to the cuts to the price paid to dairy farmers for milk solids, announced by Murray Goulburn and Fonterra Australia in April and May 2016.

The ACCC has been provided with additional funding of AU$11.4m over four years to establish an Agriculture Unit that will conduct investigations and engagement in rural and regional areas.

This inquiry has arisen due to a number of issues; in April and May 2016 Murray Goulburn Co-opand Fonterra Australia announced significant cuts to the farmgate milk price paid to dairy farmers.

In the case of Murray Goulburn, the ACCC has said that these cuts involved both a step down in the price and the partial ‘claw back’ of payments made throughout the season.

Separate to the inquiry, the ACCC is investigating this conduct to examine whether Murray Goulburn and Fonterra Australia have engaged in false, misleading or unconscionable conduct in breach of the Competition and Consumer Act 2010.