Price transparency needed for business certainty

Increasing farm costs and erratic markets have forced farmers to call on the consumer watchdog for greater price transparency and protection.

Farm leaders are calling for the consumer watchdog to be given greater powers to improve price transparency and better protect farmers from what they say is an increasing lack of market competition.

It comes as Nationals leader David Littleproud said the Food and Grocery Code of Conduct should be reformed, labelling the current code “useless” unless changes are made – including hitting supermarkets that do the wrong thing with penalties of at least $10 million.

A 2020 ACCC inquiry found perishable agricultural products are particularly susceptible to a lack of competition and transparency. Its recommendation for the grocery code to include a dispute resolution provision is being reviewed.

But Mr Littleproud said it needed to go further, calling for the voluntary code to be made mandatory; punitive penalties of at least $10 million introduced, with divestiture powers; and bringing the horticulture and dairy codes of conduct into the grocery code to complete supply chain protection.

National Farmers’ Federation president Fiona Simson said there was often too much disparity between retail and farm gate prices, and a concentration of power “is bad for competition when deregulation depends on strong competition”.

“By enabling the ACCC to have more teeth and greater powers, with their strong support for ag and ag supply chains, in every market we operate in, we can ensure farmers can market confidently and be sustainable for the long-term,” she said.

VFF president Emma Germano.

Increased transparency would allow farmers to manage businesses with greater certainty, such as increasing farm input costs, and help secure the nation’s food system whose fragility was repeatedly exposed by recent environmental, geopolitical and economic headwinds.

Victorian Farmers Federation president Emma Germano said government needed to gather all emerging data points to create a big picture analysis of production costs versus pricing, competition and rising farm debt, and its implications for food security.

“Some farmers have stopped growing certain crops due to price uncertainty,” she said.

“Supermarkets churn and burn suppliers because they know others will happily give them the lowest possible price.”

Under the reverse tender process, a grower can offer a supermarket broccoli for $7, but the supermarket can simply say others have offered less.

“There is no transparency in how prices are set and more certainty in other countries with more sales avenues,” Ms Germano said.

United Dairyfarmers of Victoria president Mark Billing said, while the dairy code of conduct has provided some certainty, farmers were missing a live pricing indicator to help them make more meaningful business decisions, particularly around outlays.

Other sectors, such as grain and winegrape growers, who approached the ACCC over alleged unfair supermarket practices last November, deal with supermarkets more indirectly.

A spokesperson said the Department of Agriculture, Fisheries and Forestry oversees a number of industry codes of conduct, including the dairy industry code, the horticulture code, the wheat port code and the sugar code.

“These cover the relationship between industry participants and provide a set of rules or minimum standards for an industry. The government is also seeking to improve price and market transparency for the benefit of farmers, retailers and consumers through the Perishable Agricultural Goods (PAG) Industries program,” the spokesperson said.

Untied Dairyfarmers Association of Victoria president Mark Billing on his property near Colac, 150km south west of Melbourne. Picture: Aaron Francis