Competition reform needed now

Industries need genuine competition reform to thrive

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Open and competitive markets drive success in agriculture, but some commodities are constrained by a lack of genuine competition in their supply chains.

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Open and competitive markets drive success in agriculture, but some commodities are constrained by a lack of genuine competition in their supply chains.

Dairy, poultry meat and horticulture are all industries where competition levers have gone awry, meaning farmers do not necessarily reap the benefits of a competitive market.

While each industry has its own discrete set of challenges, the outcomes are largely the same - an inequitable return for farmers, and the threat of farmer exodus from the industry.

The dominance of major retailers in Australia has warped the competition landscape. With only two major retailers holding a market share of over 70 percent, it is unsurprising that their irrationally low pricing on popular food items has undervalued these items.

The $1 a litre milk trend that lasted almost eight years is a well-known example of this, and, along with low prices on cheese and other dairy items, has caused value to be lost right throughout the dairy supply chain.

Similarly, the retail price of chicken meat has remained stubbornly low.

A closer analysis of the intermediary stage of the supply chain can help explain this anomaly.

With only a handful of processors in NSW to contract to, poultry farmers have lost a key feature of a competitive market - choice.

This removes their ability to demand prices that adequately cover production costs.

Then there isAnchor our fruit and vegetable farmers, whose supply chain woes came into the spotlight during coronavirus related 'panic-buying'.

While retail prices spiked in response to increased demand, farmers reported little flow on of profit.

There needs to be greater transparency around the differential between farmgate and retail prices.

NSW Farmers maintains its pursuit of fairer supply chains for these industries.

We are calling for unconscionable conduct provisions in Australian Consumer Law to be strengthened, and for the principle of fairness to be introduced to our competition framework.

It is also critical that the ACCC is better resourced to respond to abuses of power in these supply chains.

  • James Jackson NSW Farmers President
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