The Australian Competition and Consumer Commission (ACCC) has issued its Dairy Inquiry Issues Paper ahead of a 12-month inquiry that was initiated by the Australian Government.
The inquiry will examine the competition between milk processors, contracts between processors and farmers, global supply markets, and the profitability of dairy farms, and will explore the competitiveness of prices, trading practices and the supply chain in the Australian dairy industry.
The Issues Paper comes as farmers continue to struggle with falling milk prices, while some of Australia's largest dairy processors report growing profits.
Separate to the Inquiry, the ACCC said investigations relating to the cuts to the price paid to dairy farmers for milk solids, announced by Murray Goulburn and Fonterra Australia in April and May 2016 are continuing.
“The ACCC is seeking feedback from interested parties on issues across all product and geographical markets in the Australian dairy industry. This inquiry will closely examine the key competition and fair trading issues affecting the dairy industry,” ACCC chairman Rod Sims said.
“As a formal inquiry, the ACCC will also have the ability to compel information from parties including processors and retailers. Our aim is to present a really clear picture of the issues facing the market today, and make any recommendations to ensure it remains fair and competitive.”
The Coalition Government has welcomed the ACCC’s Inquiry into the Australian Dairy Industry Issues Paper.
The Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce, said the issues paper outlines the scope of the inquiry and details the ACCC’s current understanding of the broader issues faced by the dairy industry.
“In August this year, following a national Dairy Symposium of key dairy industry stakeholders held in Melbourne, I announced the independent ACCC inquiry into the competitiveness of prices, trading practices and supply chain in the Australian dairy industry,” Minister Joyce said.
“While the announcement came off the back of significant retrospective price cuts to farmers by dairy processors Murray Goulburn and Fonterra, the issues paper released today makes it clear that the inquiry will be bigger than the price cuts to dairy farmers and will examine how the entire industry operates.
“The inquiry will take a national focus, looking into the unique challenges facing the industry not only in South Eastern Australia, but also in Queensland, New South Wales and Western Australia.”
Key issues to be considered include:
- competition between milk processors
- contracting practices
- the availability of price and other market information
- the effect of private label products, including pricing, on the industry
- options for supply into global markets
- the key factors influencing the profitability of dairy farms.
“The ACCC will hold public forums in a number of dairy producing regions so we can speak with dairy farmers about their concerns, and we will release further information about these forums in the coming months,” ACCC Commissioner Mick Keogh said.
The Issues Paper, Terms of Reference and further information about the Inquiry is available here.
The ACCC must provide its final report to the Treasurer by 1 November 2017.
