Australia has a reputation for growing high-quality produce. Despite this, farmers often don't reap the rewards they deserve for their efforts to produce it.
Power imbalances across agricultural supply chains often benefit retailers and processors at the expense of farmers.
Often the retail price of food doesn't reflect of the price paid at the farm gate and it's common for intermediaries and retailers to make the largest profit along the supply chain.
Key influences of this imbalance are the strength in bargaining by retailers due to Australia's supermarket duopoly, and the consolidation of meat processing sector from poultry through to red meat.
To address this, the Australian Consumer and Competition Commission (ACCC) is undertaking a three-month inquiry into bargaining power in supply chains for perishable agricultural products.
The inquiry will examine the nature of bargaining power in the supply chains for perishable agricultural goods covering pork, lamb, beef, dairy, poultry, eggs, seafood, and horticulture.
NSW Farmers' submission into the inquiry outlined the need for change to current supply chains and welcomed competition reform to combat power imbalances.
We emphasised strengthening the unconscionable conduct provisions in Australian Consumer Law, and including the principle of fairness in Australia's competition policy framework.
We also stressed the need for the mandatory Dairy Code to be extended to include retailers.
The code's implementation has improved transparency between farmers and processors with processors minimum milk prices now published annually and banning retrospective pricing.
However retail pricing strategies continue to squeeze supply chain margins so it's time to extend the code's provisions to retailers.
The ACCC must rectify reduced margins caused by the supermarket duopoly and a rationalized processing sector.
The status quo will continue to erode farmers' profitability, limiting their ability to remain viable, invest in infrastructure and productivity improvements.
From a consumer perspective, the current supply chain issues will ultimately result in less product choice and innovation, volatility in pricing, and intermittent supply shortages.
NSW Farmers is challenging the unfair supply chains and fighting for fair returns, especially as our sector recovers from drought.
- James Jackson, NSW Farmers President
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