Senate inquiry clears Coles in milk wars controversy

The Senate inquiry into supermarket giant Coles’ decision to slash the price of milk to $1 a litre has found the dairy industry has not suffered as a result.

Despite dairy farmers calling for support after the Australian Competition and Consumer Commission (ACCC) concluding there was no problem with Coles’ decision, it seems they are again being ignored.

Dairy farmers will be pushed out of business, through the “unsustainable” prices, they say, but nobody seems to be listening.

The committee concluded the dairy farmers most likely to be negatively impacted by the milk wars are Western Australian farmers.

"The January 2011 price cuts in a staple product is undoubtedly good news for consumers in the short term," the report said.

"Provided it does not constitute predatory pricing, a retail price cut should not be discouraged."

Coles disputed opposition from dairy farmers from the start, saying the change in price would not impact them because the supermarket would absorb the difference.

"Most dairy farmers will not be significantly worse off," the report said.
In seven recommendations, the committee said reviews should be conducted into the sustainability of the dairy industry and competition law.

Australia Dairy Farmers Association Chris Griffin told Food Magazine the outcome is concerning.

“We are very disappointed in the Senate Commission’s report and we still have the same concerns we’ve had all along with the decision by Coles,” he said.

“We are heartened in some way though, that some Senators in the committee have produced a minority report that does raise the concerns we had, and stood up to Coles and the things they’re doing.”

Senators Nick Xenophon, John Williams, Bill Heffernan, John Madigan, and Christine Milne predicted a "looming market failure in the fresh milk market" in their minority report.

On the subject of the supermarket dominance and how it is impacting the dairy industry, Griffin said the impact is already being felt and will continue if nothing is done.

“It’s certainly have a direct impact on farmers, especially those in northern New South Wales, Queensland and Western Australia, and we have evidence of farmers leaving the industry,” he told Food Magazine.

“If the industry downsized so that only a few can operate in those states, there will be less milk produced and that would have a flow on effect on towns and regional areas.

“Any loss of dairy farmers is not a good thing because there is actually an undersupply of milk, especially in Queensland.

“About a million litres a week is being shipped in to Queensland to cater to the market at the moment.

“Shoppers will pay more in the end, that’s what we’ve been saying since the start.

“Supermarkets were trying to gain total control and they’ve got that.
“This short term gain will lead to long term pain for consumers.”

Griffin said the only way to solve the problem is through government involvement.

“It has happened in the UK and the Consumer Commission had to take action and we don’t want it to have to get to people on their knees before anything is done.

“We want it nipped in the bud now.”









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