The Australian Competition and Consumer Commission has given the go ahead to seven dairy farmers from Manning Valley in New South Wales to collectively bargain with Woolworths.
The ACCC said the farmers could collectively bargain with Woolworths and its agent, Milk2Market, for three years.
Woolworths will use the milk to trial a new brand, which is expected to be labelled “Farmers Own” and be positioned as an un-homogenised, old-fashioned product. Milk processor Parmalat will receive a fee for processing it.
The ACCC said that any impact on competition will be limited as participation in the arrangement is voluntary for the dairy farmers, Woolworths and Milk2Market.
It also noted that the volume of milk to be supplied is relatively small compared to the total volume produced in the surrounding mid-coast region of New South Wales.
“Collective bargaining arrangements can result in public benefits through transaction cost savings, providing participants with better access to market information and by allowing small businesses to have greater input into contractual terms and conditions, leading to more efficient outcomes,” ACCC Chairman Rod Sims said in a statement.
The decision comes as the ACCC continues its investigations into alleged misuse of market power by Coles and Woolworths.
Woolworths gets the go ahead to directly negotiate with dairy farmers.
