VFF commodity group heads welcome ACCC inquiry

Heads of the Victorian Farmers Federation peak commodity groups say they hope the Australian Competition and Consumer Commissioner inquiry will finally help level the playing field.

The inquiry, initiated by the Treasurer Josh Frydenberg and Agriculture Minister David Littleproud, will take a broad look at trading practices through supply chains, including the relationships between farmers, processors and retailers.

The ACCC will review the extent to which any potential bargaining power imbalances in these relationships can adversely impact the efficient operation of these markets

It will also look at the role of market structures and regulations in delivering efficient and equitable outcomes.

"This inquiry provides an opportunity to take a broad look at perishable agricultural supply chains in Australia, utilising knowledge we have gained in working across a range of agricultural issues," ACCC deputy chair Mick Keogh said.

"In recent years the ACCC has conducted detailed market studies in the beef cattle, horticulture, dairy and winegrape sectors, and has continuing responsibilities associated with the Horticulture and Dairy Codes, as well as the Food and Grocery Code."

Federal Agriculture Minister David Littleproud said farmers would be able to submit confidential evidence to the inquiry.

He said once produce was harvested, or processed, and sent to market, farmers had very little bargaining power, and were at the mercy of the powerful supermarkets when it came to the price they were paid.

VFF Livestock Council president Leonard Vallance said the ACCC's inquiry highlighted the important ongoing role of independent butchers.

He independent butchers helped insulate livestock producers from some of the pressures applied to egg and vegetable producers.

"Whenever you get the duopoly, the producer is pressured," Mr Vallance said.

"Butcher's identify the need for that personal contact and the repartee they have with their customers.

"They are very engaging, it's part of their marketing, but what it has done is continue the diversity in the marketplace."

The industry had worked with the Australian Meat Industry Council, Meat & Livestock Australia and retailers to ensure there was investment in the sector.

"We have seen a resurgence, in the last year or two, in retail butcher shops.

'They are constantly having to modernise their facilities, which is expensive, but that's necessary because of risks in the supply chain and the need to supply safe products."

Opportunities for small butchers to sell branded products were also growing.

"I can also see the emergence of processor retail outlets, such as Hardwicks (Kyneton)."

Mr Vallance said the red meat sector had a good structure around it, in terms of levies, marketing, disease control, pasture and genetic research.

'"Everyone says it's a bit like a bowl of spaghetti, but it works."

United Dairyfarmers of Victoria president Paul Mumford said he hoped the ACCC would make recommendations, which would make it fairer for all parts of the supply chain.

'We've always had a long-held concern about the bargaining power imbalance in the fresh food supply chain - it's not only dairy, its eggs and poultry, and it needs to be addressed," Mr Mumford said.

Mr Mumford said it was pleasing the inquiry would also look at the Dairy Code of Conduct, which currently didn't include supermarkets.

"For a mandatory code to be effective, it's imperative it picks up the whole supply chain," he said.

"The current Dairy Code of Conduct doesn't do that, retailers have been omitted from that process, to our dismay."

He said farmers needed to be treated with respect, by the supermarkets, over what they produced,

"I think it's going to give everybody a clear direction - that's what I am looking for," he said.

"The ACCC is probing the grocery supply chain and that's very welcome, so bring it on, in my view."

He said the role of the VFF and UDV was to make sure the inquiry was given the greatest ability to its job properly.

"Then it's going to be our role to make sure any recommendations are reinforced."

VFF Egg Group president Brian Ahmed said he had stopped supplying supermarkets with products, because they were offering a price that was not sustainable.

"I'd like to see some fairness, they make enough money out of eggs, and there has to be some margin left for the farmer," Mr Ahmed said.

He said many larger suppliers were scared of losing their contracts, if they complained.

"Once you are a certain size, there is no market, outside the big two or three supermarkets, where you can move that volume of eggs.

"I walked away from the major supermarkets three years ago, and it was the best move I made."

He said the supermarkets used their power to dictate price and were product would be placed.

"They are very cunning in the way they work," he said.

Pig Group president Tim Kingma said he was unaware of any pressure, from the supermarkets, on Victorian producers.

But he said the sector still needed a level playing field, with reductions in abattoir processing capacity, while imports were not restricted.

"I wish we had the same rules for everyone,' Mr Kingma said.

"I think what coronavirus has shown us is that Australia can supply food for the country, but we have to improve our labelling, so people can buy Australian product."

Grains Group president Ash Fraser said while cereal and pulse producers were a step back, in the wholesale chain, members would be watching the outcome of the inquiry closely.

The major supermarket chains said they all supported the inquiry.

ALDI works closely with more than 1,000 Australian business partners and invests in mutually beneficial relationships, a spokesperon said.

Any action taken to support them was welcomed

A Woolworths Group spokesperson said the company woud co-operate with the ACCC, as needed.

"There is already a strong legal and regulatory framework in place to monitor the conduct of participants in the fresh food supply chain,' the spokesperson said.

" We're a founding signatory to the Food and Grocery Code, which governs our dealings with more than 18,000 suppliers, including Australian fresh food providers.

"Additionally, the ACCC has had a dedicated Agriculture Unit and Commissioner since 2015 to monitor and enforce the extensive fair trading obligations in the Competition and Consumer Act across the agricultural supply chain."

In 2019, the ACCC appointed a dairy specialist within the Agriculture Unit and created a dairy consultative committee.

A Coles spokesperson said the company dairy farmers directly for the purchase of milk in some markets and so was covered by the Dairy Code of Conduct.

"Coles' supplier charter established in 2014 sets out our commitment to working in a fair, transparent and sustainable way with our suppliers, and Coles is a foundation signatory to the Food and Grocery Code of Conduct, which was prescribed by Parliament in July 2015 and enforceable by the ACCC,' the spokesperson said.

"Coles will cooperate with the ACCC inquiry as we continue to work with all our suppliers in a collaborative manner, including our hard working Australian farmers, to manage the ongoing challenges of coronavirus and ensure the safe supply of quality food to our customers at this difficult time."

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