Adjournment Speech: Dairy Industry, Oct 2018

Coles and Woolworths have completely bastardised the proposal put forward by Queensland Dairyfarmers Organisation to introduce a 10c per litre levy on all milk to help drought affected dairy farmers. When these supermarket giants, which have a $62.2 billion share of a $90 billion Australian grocery market, initially agreed to the 10c per litre drought levy, I said it was a welcome first step. But instead they have quarantined the levy, applying it only to some of their privately labelled milk, taking consumers away from branded milk.

Coles and Woolworths deserve condemnation for their tricky and cynical move. Coles also was caught out for serious, deliberate and repeated misconduct towards its suppliers when in 2014 it copped a $10 million fine. In the same way we are having a royal commission into misconduct into the banks, the evidence is mounting that we need a royal commission into the predatory purchasing practices and pricing policies of these supermarket giants that are destroying our Aussie farmers. Indeed, my experience with the dairy industry has shown me that those who deal with these supermarkets are fearful of speaking out because of the unfair treatment that they will receive. A royal commission would change this oppressive culture.

With all of the Coles and Woolworths self-serving promotion and fanfare saying, ‘Look at us; we’re looking after the farmers,’ the reality is they are not. The slick marketing campaign causing private-label milk to fly out of their fridges is making the plight of dairy farmers worse. Supermarket private-label milk, even packaged with a drought levy, is worth less to dairy farmers than branded milk. The best way to ensure that value for farmers is preserved and maintained through the supply chain is to buy branded milk.

It is very telling that the National Farmers Federation walked away from the Coles dairy drought relief fund. The fund is a farce. It may look good and may sound like Coles is doing something to help farmers, but the fund undermines the effort to ensure dairy farmers receive a fair price for their product. If a farmer wants to benefit from the Coles fund, they need to make an application, and the application process is overseen by the multinational auditing company PwC. You have to ask yourself: how much is this costing to administer and shouldn’t that money be going back to the farmers?  

But there’s more. Coles and Woolworths are so pathetic, they are only applying the 10c per litre levy to their three-litre bottles of milk. They continue to sell their private-label two-litre bottles for $2. They refuse to let go of their dairy-destroying $1 a litre milk. If you do shop at Coles, where they try to seduce you with their hypnotic Coles radio tunes into packing more and more into your trolley, spare a thought for struggling Aussie farmers, who are trying to make a buck. Until the supermarket giants play fair and show that they are fair dinkum, I encourage everyone to shop independently. Boycott private-label milk and give dairy farmers the best chance of a fairer return by buying branded milk.

Once you strip away all of the Coles and Woolworths promotional spin and blame shifting, they cannot escape the fact that the retailer collects the cash from the consumer. They determine the value of the dairy supply chain. They use their marketing power to squeeze every last cent from the processor, leaving little to nothing for the poor Aussie dairy farmer.

Coles and Woolworths’s refusal to play fair highlights the need for the government to step in. While the Australian Competition and Consumer Commission chose not to take action against the supermarket giants over their dollara-litre-milk price war, it did recommend the implementation of a mandatory code of conduct. The government must now act strongly and swiftly on that recommendation and commence the process for a mandatory code that covers producers, processors and retailers and ends Coles and Woolworths’s tyrannical behaviour.

I reiterate: I strongly believe that a royal commission covering the practices of Coles and Woolworths would be good for suppliers and consumers alike.