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Address imbalances

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December 08, 2017

Victoria’s peak body for dairy farmers says power imbalances between milk processors and supermarket giants need addressing following a consumer watchdog report into the industry.

While issues were flagged about a gap in farmer bargaining power in supply contract negotiations, the United Dairyfarmers of Victoria said the Australian Competition and Consumer Commission could have gone further.

UDV president Adam Jenkins said retailers held huge power creating a situation where processors ‘‘were being squeezed dry of profits’’.

‘‘The ACCC has repeatedly acknowledged this issue in the report, but has come up short on making any recommendations to fix this problem, other than to say that it would make no difference to farmers,’’ Mr Jenkins said.

‘‘As a farmer, I can tell you there’s no point in sorting out one power imbalance along the dairy supply chain unless every imbalance is sorted.’’

He said not a single processor would speak out against the major supermarkets for ‘‘fear of retribution’’.

A mandatory code of conduct was flagged in the finding, following a dairy industry voluntary code being announced; a measure Mr Jenkins said had already ‘‘gone some way to addressing unfair contract terms between farmers and processors’’.

‘‘We have already seen a positive impact on contract terms offered to farmers because of the code, but there could be more done to hold processors to account, as recognised by the ACCC,’’ he said.

Welcoming the interim report, Victorian Senator Bridget McKenzie said it highlighted problems which would be news to dairy farmers, but that it set the scene for feedback to be provided to the ACCC.

‘‘Dairy farmers have been telling me for some time that the biggest problem in their industry is the bargaining power imbalances between farmers, processors and especially supermarkets.

‘‘Currently, the system is skewed in favour of the large, dominant supermarkets and processors, farmers must get a better deal whether they are producing for global or domestic markets,’’ she said.

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