After a three-month inquiry into perishable agricultural goods markets, the Australian Competition and Consumer Commission (ACCC) has concluded new national fair-trading laws are required. The ACCC has found that excessive bargaining power imbalances enjoyed by retailers and food processors are creating harmful market practices in the meat, egg, seafood, milk and horticultural industries. The inquiry received more than 80 submissions and revealed harmful practices imposed on producers such as supermarkets expecting suppliers to disclose confidential financial or intellectual property details during cost-price negotiations.
The report found that the more perishable a product is, the weaker the farmer’s bargaining power is as there are many farmers of perishable ag products but few processors or wholesalers and even fewer major retailers. The report noted that while dairy processors took farmers’ costs of production into account, farmgate milk prices still did not lift in line with rising production costs in recent years. It also found that the minimum price paid by processors was higher when there was more local buying competition for the available milk. ACCC deputy chair Mike Keogh said imbalances in markets power had the potential to weaken farmer confidence in markets, reduce incentive to invest and result in slower productivity growth.