ACCC to investigate dairy industry as Joyce slams $1 milk

The Turnbull government has announced an ACCC inquiry into the struggling dairy industry.

Agriculture Minister Barnaby Joyce has warned supermarkets against selling $1-a-litre milk. Picture: AAP

The Turnbull government has announced an ACCC inquiry into the struggling dairy industry, giving the consumer watchdog increased powers to compel milk processors and retailers to provide information about their business operations.

Agriculture Minister Barnaby Joyce also urged supermarket giants Coles and Woolworths to stop selling $1-a-litre milk, warning that if they did not act, the “clumsy hand of government” may intervene.

The inquiry will be more powerful and broad-ranging than an ACCC inquiry already under way into the slashing in April of prices paid to farmers by dairy processors Murray Goulburn and Fonterra, and Murray Goulburn’s retrospective decision to make farmers pay back prior “overpayments”.

Mr Joyce made the announcement in Melbourne yesterday following an industry symposium with processors, retailers and farmers.

The formal request for the inquiry, which will begin in November, will come from Treasurer Scott Morrison under Part VIIA of the Competition and Consumer Act 2010, giving the ACCC the increased powers to obtain information from companies.

The watchdog will investigate sharing of risk along the dairy supply chain, supply agreements and contracts, competition, bargaining and trading practices in the industry and the effects of world and retail prices on profitability.

A final report is due to be presented to government in the second half of next year.

Mr Joyce said there was confidence throughout the industry that the dairy oversupply in Europe, which has seen global prices plunge, will pass, with whole milk prices up to about $2700 a tonne from a low of $1500 a tonne.

He said he had indicated to supermarket retailers that they should act to end $1 a litre milk.

“You (supermarket retailers) can solve the issue yourself but if you choose not to, don’t complain about the clumsy fingers of government coming in to try and deal with it,” Mr Joyce said.

“And I do absolutely reserve that right. I’ve had a discussion with Woolworths, I will have a further discussion with Coles.

“The days of $1-a-litre milk have got to finish because it just sends all the wrong messages and even the consumers now, go into your shop, the consumers are turning off it, because they are saying: ‘All I’m doing when I’m buying that is buying a form of exploitation. I don’t want to be a part of it. I’m happy to pay an extra 50, 60c, whatever it is, I don’t need some farmer working for $5 an hour for me to put milk on my Weeties’.”

United Dairyfarmers of Victoria president Adam Jenkins welcomed the ACCC inquiry, saying farmers had long been calling for a “no-stone-left-unturned” investigation into the whole supply chain.

He said he shared Mr Joyce’s preference for supermarkets to address the $1-a-litre milk problem themselves, but welcomed his threat of intervention if they did not.