Domestic Lamb

Government and the ACCC dodge call for lamb pricing inquiry

Terry Sim, November 22, 2023

Nationals leader David Littleproud has horned in on the lamb pricing debate.

THE Albanese Government and Australia’s competition regulator have seemingly passed the buck on conducting a specific inquiry comparing prices paid to lamb producers versus retail pricing by supermarkets.

Just days after Woolworths and Coles dropped some lamb cut prices, on November 11 Nationals leader and Shadow Agriculture Minister David Littleproud called on Treasurer Jim Chalmers and Agriculture Minister Murray Watt to urgently direct the Australian Competition and Consumer Commission to hold a price inquiry into supermarket meat sale prices.

Mr Watt’s office declined to directly respond to Mr Littleproud’s statements or state why he had not sought an ACCC inquiry, instead referring Sheep Central to the Treasurer’s office for further comment.

Assistant Minister for Competition, Charities and Treasury Andrew Leigh’s office told Sheep Central that the ACCC “has a powerful toolkit available to investigate and take action through the courts where it finds evidence of anti‑competitive behaviour.”

However, an ACCC spokesperson told Sheep Central the “ACCC does not have a broad price monitoring role and does not regulate pricing in the agriculture sector” and “whether the ACCC undertakes a price inquiry is a question for government.”

Mr Watt had previously suggested that supermarkets should “do the right thing” on lamb prices and he wanted a “reduction” between the rates livestock producers receive at the farmgate and supermarket prices.

“As I say, it just doesn’t pass the pub test for retailers to be charging the prices that they are, while farmers are getting low prices.

“All the retailers should be passing on those sorts of price reductions right now, whether it be meat or other products,” he said in a Sunrise interview on 14 November.

Reviews planned by the government include the Food and Grocery Code Review (that relates to commercial relations between the major supermarkets, wholesalers and suppliers) and a Competition Review (that relates to competition laws and policies, including proposals put forward by the ACCC around merger reform, as well as other competition law issues). Mr Watt has claimed there was no evidence an ACCC inquiry would be completed sooner than the Food and Grocery Code Review and has said lamb pricing would be considered in the code review.

Trade and heavy lamb prices have increased in saleyards by about 5-10 percent since 14 November, but Mr Littleproud said according to Meat and Livestock Australia, some sheep and lamb categories have fallen by up to 70pc in the saleyards in the last 12 months.

“Lamb prices have drastically reduced and cattle prices have fallen by about 60 per cent.

“Yet families at the supermarkets have barely noticed a difference in prices,” he said.

“While a farmer’s payment for cattle (eastern young cattle indicator) has fallen from $10.21 per kilo to just $3.65 per kilo over the past 12 months, at the supermarket it still costs around $36 per kilo for grass-fed rump steak, $25 per kilo for beef rump roast and $19 for a kilo of humble grass-fed beef mince.

“A farmer’s payment for lamb (national trade price) has fallen from $8.39 per kilo to $4.82 per kilo (carcase weight), yet families at the supermarket are paying $27 for a kilo of grass-fed graze lamb boneless shoulder roast, $18 for one kilo of lamb loin chops and $8 per kilo of lamb leg roast,” Mr Littleproud said.

Mr Littleproud said a competition taskforce recently established by Labor, to conduct a review of competition policy settings over a two-year period, failed to provide the urgent response that families and farmers required.

“This is impacting family budgets right now.

“It needs an urgent response because families and farmers can’t afford to wait potentially two years for answers.”

He said unlike a review, the ACCC would also have greater power to act.

“Many families are struggling to afford their grocery bill each week so it’s important the government acts swiftly to ensure there’s transparency in meat prices.”

Mr Leigh said the government had also outlawed unfair contract terms to help protect small businesses from being pushed around by big corporations and created a Competition Taskforce in Treasury to ensure the nation’s competition policy settings are fit for purpose. Mr Leigh had previously suggested lamb suppliers with concerns about the conduct of processors or supermarkets give feedback to the recently reappointed independent Food and Grocery Code reviewer, Chris Leptos.

The ACCC is aware …

The ACCC spokesperson said the ACCC is aware of reports from a range of agriculture industries of differences between the price received by farmers for their produce and that charged by retailers.

“Businesses can generally set, raise and lower the prices they charge for the products and services they supply.”

The spokesperson said past attempts to impose regulated pricing in agriculture – such as the Wool Reserve Price Scheme – eventually had a disastrous direct impact on farmers, and also stifled innovation and productivity, reducing the global competitiveness of the sector.

“Australia’s recent success as a major agricultural exporter is very much dependent on the competitiveness of the sector, which would inevitably be put at risk if prices were to be regulated.”

The spokesperson said the ACCC has, in a number of inquiries and market studies (Cattle and Beef market study 2017, Wine grape market study 2019, Dairy Inquiry 2018, Perishable Agricultural goods inquiry 2020) made recommendations about the need for more price transparency in agricultural supply chains from downstream participants such as food processors.

“This is particularly important in concentrated markets.

“To bring about such enhancements requires government policy response.”

The spokesperson said as noted in the interim report of the Senate Select Committee on Cost of Living, grocery prices have been impacted by various factors, including supply chain disruptions, increasing prices of fuel and energy, high transport costs, labour shortages, poor weather conditions and significant weather events, and high international demand for some products placing additional pressure on domestic prices.

SPA encourages lamb consumers to shop around

On November 13, Sheep Producers Australia chairman Andrew Spencer said he would hope that the ACCC doesn’t have to wait for ministerial approval before conducting their own investigations into the pricing of meat or any other commodity.

“There’s a lot of value adding that happens between the farm gate and the retail shelf, and products pass between a number of supply chain participants.

“Margins are made, or not made, at each step in the process, so the focus doesn’t need to only be on the retail end,” he said.

“Clearly cost of living pressures are hurting Australians and cheaper meat can certainly help to meet the weekly budget.

“So we’re happy to see supermarkets reducing prices for lamb and in some cases, committing to do so over a defined period,” he said.

“Supermarkets continue to be an important outlet for Australian lamb and their support for their Australian farmer suppliers doesn’t go unnoticed.

“I’d encourage consumers to shop around and look for the best combination of quality, convenience and price for their Australian lamb.”

Support for wider inquiry into supply chain issues

National Farmers Federation chief executive officer Tony Mahar said if the price of produce goes down at the market or saleyards, the federation would hope that is passed on to the consumer.

“Competition in the supply chain and ultimately its impact on price is a key issue for farmers and consumers.

“The NFF wants to see better supply chain transparency so we can see just who is clipping the ticket between what farmers get and the price on supermarket shelves,” he said.

“While the NFF would support a price inquiry, it’s important to note that any inquiry will take time and there are things government can do today to deliver tangible benefits to farmers.

“We want to see the government take action and implement more reforms that help protect farmers against the mis-use of market power, increase price transparency, and support a more competitive, dynamic supply chain in Australia,” he said.

Former head of the ACCC, Allan Fels, told The Australian he backed calls for the commission to conduct an inquiry into the matter, saying it would be done “quicker and better” than the government’s proposed Food and Grocery Code review.

Austran Meat Industry Council chief executive officer Patrick Hutchinson has disputed claims of price gouging and told The Australian politicians were making a problem out of an issue that was not questioned when prices were beneficial for farmers. He said any review should aim to lessen the effects of price volatility across the whole supply chain.

ACCC conducted a pricing inquiry in 2007

In 2007, the ACCC conducted an “Examination of the prices paid to farmers for livestock and the prices paid by Australian consumers for red meat” for the Federal Government.

https://www.accc.gov.au/system/files/Examination%20of%20livestock.pdf

The inquiry concluded that both the livestock and retail meat markets appear to be reasonably competitive.

“The major supermarkets face competition from other buyers (for both domestic and export markets) when purchasing livestock and they purchase a relatively small percentage of Australia’s total red meat production.

“Under these conditions it seems unlikely that they would be able to suppress prices and/or impose onerous terms and conditions without producers altering their specifications to target alternative markets,” the report said.

“Likewise, in retailing, while Coles and Woolworths are the two largest competitors with about half of all meat sales, they face competition from each other, other supermarkets and about 3000 independent butchers.

“In these conditions, it seems unlikely that an attempt by any one party to charge unreasonably high prices could be sustained without losing market share.”

 

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Comments

  1. Doreen Baker, November 28, 2023

    The price of all meat is beyond every household in Australia at the moment. And why we ask? I can answer that in one word: greed. Just stand at supermarket meat fridges see the despair on the faces of the aged and parents. Talk to them as I do and they will tell you they can’t give their children meat more than once a week, if at all. Doreen Baker

  2. Tom Casey, November 24, 2023

    Powerlines, turbines, solar panels, big burning batteries is all Bowen’s bludgers want our ground for.

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