AUSTRALIAN Dairy Farmers (ADF) has expressed its frustration and concern with the competition watchdog’s decision this morning to allow Coles to purchase two dairy manufacturing facilities.
The ACCC has announced that the deal was unlikely to decrease competition and that the mandatory Dairy Code of Conduct and the voluntary Food and Grocery Code of Conduct provided safeguards for farmers and processors.
ADF President Rick Gladigau said: “We consider the ACCC’s decision not to oppose the Coles acquisition of Saputo dairy plants will be a key turning point that the industry and ACCC will look back upon and regret.”
ADF is concerned with the long-term ramifications. “We hope that in 10 years’ time we are not saying ‘we told you so’, like we have said about the impact of $1 litre milk that Coles started in 2011.
“We cannot see how this deal will result in anything but increasing Coles’ already substantial market power, reducing market competition and market transparency, and increasing risk to farmers.
“We are especially disappointed in the missed opportunity to impose additional safeguards or undertakings on Coles.
“The ACCC has said that safeguards are already in place as Coles purchases of raw milk from farmers were covered by the mandatory Dairy Code of Conduct – yet we know processors have been lobbying the ACCC and government to have the Code reviewed and watered down.
“The ACCC further stated that Coles’ interactions with processors are also covered by the voluntary Food and Grocery Code of Conduct – yet we know the ACCC themselves recommended in the Perishable Agricultural Goods Inquiry that the voluntary Food and Grocery Code should be made mandatory for retailers and wholesalers.
Mr Gladigau said: “Given the ACCC’s decision on Coles-Saputo and their reasoning on safeguards, we are calling on the Federal Government to now take steps to make the Food and Grocery Code enforceable as per the ACCC’s own inquiry recommendations.”
Early price signals were also concerning: “It is not lost on us that Coles has dropped the retail price for milk at the same time as the ACCC’s announcement, and we wonder what this means for future pricing of milk to dairy farmers.
The ACCC inquiry into bargaining power imbalances in perishable agricultural goods in Australia in 2020 identified information failures and poor transparency in the supply chain. ADF believes the acquisition will supply Coles with a vertically integrated supply chain from farmer to processor, to retailer, to consumer – further increasing bargaining power imbalances and reducing market transparency and competition.
“The deal does not improve transparency, bargaining power imbalances, information sharing, or competition – not for farmers, processors, other milk brands, or consumers,” concluded Mr Gladigau