
There is a renewed focus on Australia's food supply chain this week, highlighting some serious issues with our competition and takeover laws.
While there's nothing wrong with the idea of mergers and acquisitions in general, what we're increasingly seeing is a level of control over the supply chain that is frankly extraordinary. Monopolies in the dairy, poultry, meat, and fresh produce sectors are bad news for farmers and consumers; they ultimately diminish choice for both parties.
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Farmers have a limited choice in who to contract to, forcing them to accept the pay and other conditions set by big business. A lack of competition also tends to limit the range of products consumers can choose from.
Left unchecked, this increasing pressure on farmers will have a negative effect on the future of farming. Who would choose to start a business in a sector where you pay retail and sell wholesale, losing money at the whim of a big company?
I know many Australians wouldn't be aware of this shrinking competition, but we are all witness to the control held by major retailers in the supermarket sector. Australia's supermarket sector is one of the most concentrated in the world.
Retailers have unchecked influence over how fresh food is valued. The retail price wars that resulted in "dollar-a-litre milk" is a noteworthy example. Even when retail prices lift, as they have done recently, farmers tend to report unchanged profits.
Competition in fresh food supply chains has been the subject of several inquiries, yet we have seen limited action to date. In his departure speech, even outgoing ACCC chairman Rod Sims warned of the importance of fixing competition laws.
We need a competition watchdog that has teeth, that can act on the myriad inquiries and recommendations that at present are gathering dust.
- James Jackson, NSW Farmers president.
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