Posted by Rita Mu
The Australian Food and Grocery Council (AFGC) and consumer group Choice have called for the establishment of a supermarket ombudsman as a part of a joint submission to Senate Economics Committee’s inquiry into the impacts of retail prices on the dairy industry.
In January, supermarket giant Coles cut the price of its home brand fresh milk by as much as 33 per cent to $2 for two litres– making it the lowest price in store for any fresh milk. Soon after, competitor Woolworths followed suit.
The supermarkets also slashed the cost of butter and cream, sparking fury from the Australian Dairy Farmers, who said the price cuts were “unsustainable” and would eventually cost the dairy industry jobs.
Choice and the AFGC said an ombudsman would promote transparency in pricing and fairness along the supply chain and provide recourse for those participants in the food and grocery sector who lack market power, particularly small business, small-to-medium food manufacturers and consumers.
Chief Executive of Choice, Nick Stace, said an ombudsman would help to address the lack of competition in the supermarket sector, which is currently dominated by Coles and Woolworths.
“CHOICE believes cheaper groceries are a fundamentally good thing, but we question whether recent actions from the major supermarkets are a sign of genuine competition or a short-term strategy that may erode competition further and see price rises in the future,” Stace said.
“We believe real leadership is needed to address the whole-of-market problems that arise when one or two players drive the industry, whether that is retailers or suppliers.”
AFGC Chief Executive Kate Carnell said the ombudsman would help to keep Australian jobs in the food and grocery sector.
“This is all about creating a level playing field for manufacturers and consumers,” Carnell said. “If the current ‘price war’ continues, the profitability of Australian food manufacturing sector, including farmers, will be eroded and the result could be a significant loss of both processors and producers.”
Image: smh.com.au