The federal government, the Greens and the National Farmers Federation are all unsure that giving the Australian Competition and Consumer Commission (ACCC) the power to set farm gate prices is the best solution to unsustainable discounting.
Last week it was announced that Coles and Woolworths will transfer the discounts they’re no longer allowed to apply to petrol to grocery items, and while discounting can help both the consumer and producers with excess produce, chairman of the ACCC Rod Sims says it’s important that supply contracts are honoured and that discounts don’t last so long that they damage other retailers.
According to the ABC, the National Farmers’ Federation voiced similar concerns, arguing that long term discounts can hurt food producers.
"While cheaper prices for consumers are important when mums and dads are balancing their budgets, I'm sure they'd all like to see that they can continue to buy Australian food into the future. And if that's to be the case, then we need to have a system in place to make sure that both farmers and food processors can survive as well,” Matt Linnegar, chief executive of the National Farmers' Federation, said.
Providing the ACCC with the power to set the farm gate prices isn’t necessarily the best option, Linnegar added.
"When it comes to the powers of the ACCC, and whether it's the ACCC or some other body or ombudsman, what we need to ensure is that the activities of those in the supply chain are [not] going to have a detrimental impact on others in the supply chain, that needs to be addressed in some way.
"I'm not sure whether giving the ACCC the power to set prices is the answer. I think you'd need to have a long, hard look at that before you went down that path,” he said.
Small Business Minister Bruce Billson, agrees, and says the government has set up the root and branch review of competition law to look at pricing issues. There is also existing legislation in place to prevent predatory pricing.
"There are constraints on the extent of, and the way, discounting can be implemented, that guard against predatory pricing where discounting is used to wipe out competitors," he said.