Competition and transparency across markets is fundamental to the long-term prosperity of the Queensland agriculture sector. Agriculture is a good example of the role individual businesses can play to increase the economic dynamism and strength of regional, state and national economies.
However, increased market concentration and the exploitation of market power continues to have an impact on farmers and is in some cases, threatening the long-term viability of many farm enterprises.
There is a need to significantly improve market transparency and competitiveness to build a fairer playing field for agriculture. In order to bring about positive change, a number of actions are needed. This includes wholesale reform of Australia’s existing competition law, increased access to dispute resolution provisions for unfair business practices, the introduction of mandatory codes of conduct to apply to concentrated agricultural supply chains to restrict unfair competition behaviours, along with increased resourcing of the Australian Competition and Consumer Commission (ACCC).
The ACCC is an independent Commonwealth statutory authority charged with the responsibility of enforcing the Competition and Consumer Act 2010 and other legislation promoting competition and fair trading, while also regulating national infrastructure, for the benefit of all Australians.
For instance, recently the ACCC considered submissions from a number of industry participants, including eastAUSmilk and QFF, objecting to Coles’ proposal to buy two milk processing plants from Saputo. Queensland dairy farmers expressed concerns that if Coles owns the NSW facility, it could impact where Queensland milk is processed and affect the viability of some of the state’s milk production.
In July the ACCC then published its statement of concerns regarding the proposal including that the acquisition could lead to reduced competition for raw milk in the NSW market and give Coles the incentive and ability to frustrate competitor businesses at various points of the dairy supply chain. The ACCC also acknowledged concerns raised by submitters that this proposal would result in a major structural change as it would be the first time a supermarket had its own processing facilities and has called for further comment on this matter.
Last week Lactalis were fined $950,000 by the Federal Court for a Dairy Code of Conduct breach, the first penalty of its kind in Australia. It was the first contested proceeding under the code, which was introduced by the Federal Government in 2020 to promote fair trading between farmers and the companies that process their milk. The ACCC took action because they considered that Lactalis’ conduct would reduce transparency in the industry and perpetuate systemic bargaining power imbalances between processors and farmers.
These recent examples from the dairy industry highlight the ongoing work that needs to take place if we are to address power imbalances in the market, increase transparency and build a level playing field in which farmers can continue to operate.
The Dairy Code of Conduct is currently being reviewed by the Federal Government with industry calling on the relationship between processors and retailers to be included in the updated version. QFF reiterates the important role of the ACCC and its Agriculture Unit and encourages the Federal Government to increase its support to build the capacity of the ACCC to continue to oversee fair commercial dealings for farmers in line with competitive markets.