Australian Supermarket Power 'Laid Bare': Dairy Industry Faces Challenges
Source: dairynews.today
The Australian Dairy Farmers highlight significant issues of power imbalance, tactics, and transparency within the supermarket sector impacting the dairy industry.
Australian Dairy Farmers assert that the competition watchdog’s recent inquiry into supermarket pricing reveals significant power imbalances, tactics, and transparency issues in the dairy industry. ADF president Ben Bennett indicated that the Australian Competition and Consumer Commission's findings show that more must be done to bolster protections for dairy farmers.
The Australian Competition and Consumer Commission (ACCC) has released a 441-page report detailing the challenges faced by fruit and vegetable growers in their dealings with Australia’s two largest supermarket chains, Woolworths and Coles. The report describes this relationship as marked by "one-way accountability" and fears of retribution.
The ACCC has recommended that Coles, Woolworths, and Aldi improve transparency and offer suppliers more certainty regarding orders and pricing. According to ACCC's assessment, growers often receive long-term supply forecasts that are non-binding, yet are pressured to maximize production despite having no guarantee of sale.
The regulator pointed out the imbalance of power due to the supermarkets' dominance—they control 77% of the market—and the information asymmetry that exists between supermarkets and suppliers. Coles and Woolworths have responded by stressing the inherent volatility in fresh produce that can be influenced by external factors such as weather and pests.
President of the National Farmers’ Federation, David Jochinke, underscored the urgency of rectifying these imbalances, while Ben Bennett, of the Australian Dairy Farmers, highlighted the detrimental effects on dairy farmers due to supermarkets increasing their margins at suppliers' expense.
Michael Coote, from AusVeg, expressed cautious optimism about the ACCC's recommendations but stressed the importance of pragmatic implementation to avoid creating additional bureaucracy for farmers.
Both Woolworths and Coles have extended commitments towards boosting transparency and maintaining robust partnerships with suppliers, amidst ongoing scrutiny of their practices.
"This report backs up what we've been saying for years—that the big supermarkets have increased their product margins over the past five years at the cost of our industry," Bennett stated. The report highlights that supermarkets sourcing milk directly from farmers exacerbates sector challenges and erodes market competition. Bennett calls for the government to enforce the recommended reforms and ensure that retail price increases benefit farmers. The report, welcomed by ADF, aims to strengthen provision and protection mechanisms within the Dairy Code of Conduct.
The Australian Competition and Consumer Commission (ACCC) has released a 441-page report detailing the challenges faced by fruit and vegetable growers in their dealings with Australia’s two largest supermarket chains, Woolworths and Coles. The report describes this relationship as marked by "one-way accountability" and fears of retribution.
The ACCC has recommended that Coles, Woolworths, and Aldi improve transparency and offer suppliers more certainty regarding orders and pricing. According to ACCC's assessment, growers often receive long-term supply forecasts that are non-binding, yet are pressured to maximize production despite having no guarantee of sale.
The regulator pointed out the imbalance of power due to the supermarkets' dominance—they control 77% of the market—and the information asymmetry that exists between supermarkets and suppliers. Coles and Woolworths have responded by stressing the inherent volatility in fresh produce that can be influenced by external factors such as weather and pests.
President of the National Farmers’ Federation, David Jochinke, underscored the urgency of rectifying these imbalances, while Ben Bennett, of the Australian Dairy Farmers, highlighted the detrimental effects on dairy farmers due to supermarkets increasing their margins at suppliers' expense.
Michael Coote, from AusVeg, expressed cautious optimism about the ACCC's recommendations but stressed the importance of pragmatic implementation to avoid creating additional bureaucracy for farmers.
Both Woolworths and Coles have extended commitments towards boosting transparency and maintaining robust partnerships with suppliers, amidst ongoing scrutiny of their practices.
"This report backs up what we've been saying for years—that the big supermarkets have increased their product margins over the past five years at the cost of our industry," Bennett stated. The report highlights that supermarkets sourcing milk directly from farmers exacerbates sector challenges and erodes market competition. Bennett calls for the government to enforce the recommended reforms and ensure that retail price increases benefit farmers. The report, welcomed by ADF, aims to strengthen provision and protection mechanisms within the Dairy Code of Conduct.
