Milked for all their worth: farmers feel the pain

Source: Northern Daily Leader

Brian Wilson, a fourth-generation cattle farmer with a property near Tamworth, says the Coles and Woolworths duopoly cut his income by about $80,000 last financial year.

For Mr Wilson, the Australian Competition and Consumer Commission’s stepped-up investigation of the duopoly’s power over suppliers can’t come soon enough.

Mr Wilson said producers in New England went through a competitive tender process to win the Coles and Woolworths milk contract, but many farmers were forced to sell their product at a loss.

Mr Wilson said dollar-a-litre milk offered by Coles and Woolworths had a drastic effect on his Tamworth farm and other farms in the region.

‘’The last financial year we were probably down $80,000 dollars on our milk income,’’ he said.

‘’The processors can’t talk with each other to keep their prices up, so it becomes very cut-throat,’’ Mr Wilson said. ‘’They get the contract, but it’s good news and bad news, because they have to go so low to get it.’’

But for some, the pressures of the system means the investigation comes too late.

NSW Farmers Association chief executive Matt Brand said 30 farming families in the state had left the dairy industry in the past year because of price cutting by supermarket chains.

He said the market dominance of large retailers which adverselyaffected returns to farmers and processors had been a concern for years.

‘’We just want to see these guys getting a fair return for a solid days work,’’ Mr Brand said.

The ACCC announced last week it would investigate the supermarkets over claims they bullied suppliers, misused market powers and potentially breached the law.

Fifty producers anonymously stepped forward with evidence against the supermarket giants, who last year earned a combined revenue of $70 billion.

Mr Brand said some sort of resolution needed to be reached.

“The reality is supermarkets aren’t going anywhere and neither is agriculture and we need to all be able to sit down and have a serious look at supply chain solutions,’’ he said.

He said the Association supported the investigation particularly the ACCC’s promise to protect the identity of those who spoke up.

But Mr Wilson said producers had lost control of the dairy industry, and he wasn’t sure if they could gain it back.

He said an independent body needed to step in to curb the power of the pair before they “take over the world’’.

Both supermarkets said they would co-operate with the ACCC investigation.

A spokesman from Coles said the supermarket absorbed the cost of low-price milk by reducing its own profits, and it compensated dairy processing companies who buy the milk from farmers.

“Our contracts with dairy processing companies contain ‘rise and fall’ clauses, which mean if farm-gate prices increase we pay the processors more,” the spokesman said.

“There are a number of factors affecting farm-gate prices such as global demand for milk, exchange rates and rising input costs.”

Woolworths said they matched the milk price set by Coles, but they were committed to supporting the dairy industry.

“We acknowledge that there are significant problems in some areas due to a number of factors adversely impacting the dairy sector,” a spokesperson said.

“The challenge for retailers is that our relationship is with processors, not dairy farmers.”

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