Senate Committees watching brief on Coles – ADF doesn’t trust Coles either

Australian Dairy Farmers (ADF) Vice President Adrian Drury has noted the release of the Senate Economics References Committee second interim report and its recommendations of a watching brief on Wesfarmers’ subsidiary Coles.

“We don’t trust Coles either,” Mr Drury said. “They need to be watched like hawks and it is important the Senate Committee will be keeping an eye on the duration of the ‘Down Down’ campaign and the outcome of renegotiated contracts with processors and the impacts on farmgate prices.”

It should also be noted that Coles has repeatedly refused to rule out dropping prices for processors and farmers in future contracts.

The Senate Committee’s report highlights numerous examples of Coles’ being disingenuous, stretching the truth and showing a distinct lack of transparency. It is worth highlighting a few.

On pages 8 and 71 the report highlights the fact that Coles has used misleading and deceptive language by using the phrase ‘staying down’.

Coles Managing Director, Ian McLeod is quoted as stating, “We have avoided using words like ‘permanent’ or ‘every day’, as some of our competitors have, because we believe that particular statement leads people to believe that the price would never go up.’

The report then states ‘contrary to Mr McLeod’s assertion that Coles is not using words like ‘every day’, the committee notes that various Coles catalogues have incorporated that statement as part of the down and staying down campaign, with direct reference to the milk price cuts.’

ADF believes Coles has used false advertising and engaged in misleading and deceptive conduct as the average consumer would view the words ‘staying down’ as meaning a permanent discount, not for six months with a large number of caveats as Coles has subsequently tried to claim.

As Senator Colbeck pointed out at the hearing on Tuesday 29 March, “staying down to me is deceptive. Yet it is not the reality, staying down means for about six months, because that is what the Australian consumer expects. Do I have to write a new dictionary based on Coles?”

Coles has consistently maintained the fiction that lower retail prices on milk will have no flow-on effect to processors and dairy farmers. On page 14 and 15 of the report this fiction is debunked.

Woolworths is quoted as saying, the lower prices…”set a new benchmark, and can be expected to flow back to processors and farmers as new supply and pricing arrangements are negotiated over the coming months and years.’

On pages 41, 69 and 70 the Senate Committee report highlights a fact that Coles has continued to wilfully ignore – that many Queensland dairy farmers’ milk payments are being affected right now, sometimes by thousands of dollars, because of Coles’ cutthroat discounting of milk.

Coles has frequently called for transparency across the value chain, an exchange highlighted on page 46 of the report shows this to be the hollow call it is.

“The apparent discrepancy in the transparency of the prices between the processors and the producers, compared to the retailers and the processors, was further discussed during ADF’s appearance at a public hearing.”

Senator Colbeck: “You gave some evidence that farm gate prices are on your website, so it is pretty easy to get information on farm gate prices. The real place where prices are hidden is, in fact, between the wholesaler and the retailer…So for Coles to claim that the lack of transparency is, in fact, at the farm gate is not necessarily the case.”

Mr Griffin (ADF Vice President) – “That is right.”

In addition to the examples outlined above Mr Drury says “Coles has shown contempt for consumers, contempt for dairy farmers and contempt for the Senate Standing Committee on Economics by providing their answers to Questions on Notice the day before the Committee is due to report. It is yet another example of Coles being tricky.”

Wesfarmers needs to make its subsidiary Coles treat consumers, dairy farmers and the Senate with the respect and the seriousness it deserves and be transparent, honest and open in their answers.

Coles has hidden behind claims that information is ‘commercial-in-confidence’ or was provided behind closed doors ‘in-camera’ over a dozen times in their ‘answers’ to the Senate Committees questions on notice.

Mr Drury says, “this is hardly the transparent behaviour that Coles is so fond of advocating. They seem to believe that transparency is okay for everyone else but not for themselves. ADF gives Coles a big thumbs down on openness and honesty.”

One of the questions asked of Coles related to what happened to the price of all the other products that Coles has not cut the price on – approximately 15,000 products in a typical supermarket?

Coles refused to answer the question.

Mr Drury says, “This is a damning indictment of Coles. All along ADF has said that dairy farmers do not believe that Coles would absorb the cost of its unsustainable price cuts and that they would be passed on to dairy farmers and Coles’ customers.”

Coles’ competitors have stated, both publicly and privately, that these price cuts are unsustainable.

Mr Drury says, “Dairy farmers do not trust Coles and neither should their customers. There are many reasons not to. Throughout this debate Coles has knowingly used figures that are deliberately misleading. ADF is now taking the opportunity to correct them.”

Attached is a fact sheet refuting many of Coles myths.

The key point in this whole debate is that milk priced at $1 per litre is simply not sustainable – there is not enough money in the value chain to support farmers, processors and retailers at that price. Coles knows it. The last time milk was priced at $1 per litre was in 1992. Selling a product for what it costs (or less) to produce, transport and retail is unsustainable.

Media Contact:

Adrian Drury, ADF Vice President

M: 0428 569 245

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