As the Australian Competition and Consumer Commission finalises its report on the dairy inquiry, primary producers should clearly understand that competition policies are solely interested in deriving a better deal for the consumer no matter the wider cost. It does not protect small businesses, like farmers, from unfair or unethical conduct of powerful market players. The poor treatment of poultry, dairy and egg farmers is a testament to this lack of concern.
If powerful market players, such as large retailers and processors, bulk up their own profit margins by eroding the dairy farmers’ revenues down to a level that only guarantees subsistence and pass on a small fraction of the costs savings to consumers, this would be a good (short-term) outcome from a competition policy stand point. In the long run, there may be periods where supply of fresh milk to consumers is jeopardised, noting that the supply of dairy takes long periods to adjust, and cannot keep up with the marketing whims of supermarkets.
If as a society we care about maximising economic and social outcomes, we need other mechanisms to guarantee these outcomes outside the competition framework. Similarly, industry players within the agricultural sector must come together to work out and adhere to principles that will ensure fair and ethical dealings among all stakeholders within the supply chain. This is not about subverting competitive market forces or seeking the re-regulation of prices, it is about powerful market players earning and adhering to corporate social responsibility, being a good corporate citizen.
Competitive supply chains do not have to be adversarial, do not preclude cooperation, and can identify and execute win-win outcomes for farmers, processors, retailers, and the consumer. A fair and ethical agricultural supply chain is not just a social imperative, but an economic one.
- NSW Farmers’ business economics and trade committee chairman Peter Wilson