Australia’s struggling dairy farmers face yet another inquiry. They needed help, not more talk, a long time ago.

In April 2018, the ACCC produced a report to Government after an exhaustive 18-month-long inquiry into the Australia’s dairy industry.  The Morrison Government has now announced yet another inquiry while a Senate Committee inquiry is still in progress.

Dairy farmers have made it clear to the committee that they need help now and will be disappointed that the Morrison Government has announced another inquiry.

Queensland Dairy farmer, Mr Trace made it clear to the committee that dairy farmers are desperate for real action to fix the farmgate milk price, stating that:

“We need to get the farmgate milk price up so that we can sustain the industry. That's what we need. It could be solved in a day with the right people in a room. We need the political will to do it, and that's what the farmers are doubting.”

The Treasurer says the ACCC will:

… undertake an inquiry into harmful imbalances of bargaining power between farmers, intermediaries, including processors, and retailers in the domestic supply chains of perishable agricultural goods in Australia.

In its 2018 report the ACCC concluded:

… farmers’ lack of bargaining power means that they are unlikely to benefit from an increase in the retail (or wholesale) prices of private label milk or other dairy products. Even if processors were to receive higher wholesale prices from sales to supermarkets, this does not mean the processors will pay farmers any more than they must secure milk. Farmers’ ability to capture their appropriate share of profit.

The ACCC identified the obvious; farmers don’t have any relationship with Coles, Woolworths, or any other retailer. They deal only with the processors and there is a clear market power imbalance between the two.

If the Government is saying the ACCC was wrong, it should make that clear and invite it to re-visit this issue.  The Treasurer also says: 

… the ACCC will also examine the effectiveness of the new Dairy Code of Conduct including by considering options to extend the code across the entire domestic dairy supply chain.

So, the Government is already questioning its own Code of Conduct, its only meaningful response to the last ACCC inquiry.  And it’s doing so even though the ACCC report said there is no relationship between farmers and retailers.

If the Government is serious about finally helping our struggling dairy farmers, it will extend the terms of reference for the latest inquiry to include an investigation of the merits of a mandatory minimum farmgate milk price in each dairy region.