A closer look at supermarkets’ power


NSW Farmers has welcomed the announcement of an ACCC inquiry into the fresh food and dairy supply chain, which will scrutinise the treatment of farmers by supermarkets.

The three-month probe comes in response to long held concerns about bargaining power imbalances in some fresh food supply chains, including dairy, horticulture, eggs and poultry meat.

NSW Farmers President James Jackson said the inquiry is a promising development for farmers, who have been raising the issue of supply chain power inequities for some time now.

“This inquiry is particularly significant for dairy, as it will examine whether the new Dairy Code should be extended across the entire chain to include retailers,” Mr Jackson said.

“The major supermarkets’ pricing wars on milk and cheese have caused irreparable damage to dairy farmers. Supermarkets have squeezed the margins of processors and farmers for short-term benefits to the consumer.”

“Quite simply, competition policy has failed farmers and has made supply chains less sustainable. It has allowed the supermarkets to extract unreasonable margins, forcing farmers to operate below the cost of production.”

“The supermarkets have not been adequately held to account under the current system, and we want to see this inquiry address the issues we have flagged in the past. We want to see reforms to unconscionable conduct provisions to challenge the power of retailers and also the principle of fairness included in the National Competition Policy Framework.”

Mr Jackson said such detrimental impacts are not isolated to the dairy industry and similar problems have been identified in other supply chains, such as poultry meat and horticulture.

“The supply chain inequities plaguing poultry meat farmers have only come to light recently,” Mr Jackson said.

“The retail price of chicken has barely lifted over the past decade, despite prices on other proteins rising.”

“Not only is chicken meat undervalued at the retail level, the consolidation of processors in NSW means farmers have limited choice in who to contract to and are left with little bargaining power.”

“Our horticulture industry faces similar challenges in retail, with the price of fruit and vegetables paid to farmers remaining stubbornly low. While these items have fluctuated in price over Covid-19, profits remain largely unchanged for farmers.”

“This independent inquiry is a much needed development for our farmers, especially as they continue to supply fresh produce in a time of significant uncertainty.” Mr Jackson concluded.
  
Date: Thursday 27 August 2020
Media Contact:  Alexandra Bunton  | 0434 399 639 | buntona@nswfarmers.org.au