Domestic Lamb

NSW Farmers backs ACCC inquiry into supermarket sector

Sheep Central, January 12, 2024

NSW Farmers president Xavier Martin.

PRESSURE is mounting for an unfettered Australian Competition and Consumer Commission inquiry into the supermarket retail sector, despite the government moving to appoint Dr Craig Emerson to head its Food and Grocery Code of Conduct review.

Following on from a renewed call from National Farmers Federation for the government to mandate the code across the supply chain, NSW Farmers today called for an ACCC inquiry into the supermarket retail sector “as fair prices for consumers and farmers remain nowhere in sight.”

Supermarket Coles this week lowered the price of its Australian lamb loin chops to the lowest level in four years for the next two weeks and said the price of lamb cutlets would fall by $5 a kilogram until 23 January.

But NSW Farmers President Xavier Martin said with grocery costs surging, consumers and their families are struggling to put food on the table, while “farmers are still receiving the same dysfunctional prices for their produce as they did when input costs were far lower.”

“It has become increasingly clear that margins are not being passed through the supply chain in a fair and equitable manner, and it is farmers and families who are footing the bill.”

Mr Martin said farmers were bearing the brunt of the anti-competitive behaviour by supply chain middlemen, with many NSW Farmers members reporting significant abuses of power by the major chains.

“Farmers are being offered increasingly lower prices that often don’t cover their cost of production, with little justification and a ‘take it or leave it’ attitude from supermarkets,” he said.

“Many farmers have also faced the challenge of being locked into the one buyer due to their unique specifications and requirements, and some have even reported their produce has been rejected when a buyer has discovered they are also supplying other businesses.”

Mr Martin said consumer research showed that the average weekly cost of groceries increased by $37 between February 2022 and February 2023.

“Not only are these price increases astonishing, but they are also increasingly unrealistic for consumers and their families in the current economic environment.”

However, Mr Martin said a review of the food and grocery code of conduct by former competition minister Dr Emerson would likely do little to address the pressures farmers and families face as a result of supermarket power abuses.

“As the Food and Grocery Code only covers a small fragment of the supply chain, it will not delve into the core issues that need to be addressed, such as price transparency and the excessive profits gained through price gouging,” Mr Martin said.

“The Emerson review of the code will also rely solely on verbal testimony from stakeholders, rather than a rigorous ACCC analysis of the prices being charged to consumers, the prices being paid to suppliers and the costs supermarkets incur – which is what we desperately need.

“Failure to properly review these issues via the ACCC will likely force more farmers to exit the industry and lead to a reduction in food and fibre supply, further magnifying the rising food costs we are seeing today,” he said.

ACCC needs Section 95 powers – Jochinke

Mr Jochinke said the NFF supports the code applying to the entire food and grocery supply chain and to long-term supply contracts for “fairness and transparency.”

“The key catchcry for us, is yes, the code needs to be improved, but the ACCC needs to have increased powers, it needs to have Section 95 powers, so it doesn’t have to wait on the Treasurer to call on that.”

“We also don’t want the government to wait for this review to actually improve competition laws, because we are so heavily concentrated with only a few major players dominating the landscape throughout the supply chain.

“I know we need to have some big companies to be profitable and get scale, but the market force and power that they now have is extreme.”

Mr Jochinke said it is his understanding that the ACCC needs government or Treasurer approval for the ACCC to have Section 95 powers (under the Competition and Consumer Act) to undertake a pricing inquiry.

“At the moment they (the ACCC) can call someone to give evidence and you can decided to show up or not and when you do show up you can decide to give them a blank piece of paper or the bible – it’s completely up to the organisations and the individuals, but with Section 95 powers, this changes and it becomes a legal proceeding.”

According to the Guidelines on section 95ZN claims in price inquiries, the ACCC is able to use a range of information-gathering powers once the Minister has directed or approved the holding of a price inquiry. These include issuing compulsory notices under section 95ZK of the CCA, and conducting formal inquiry hearings under section 95R of the CCA.

On whether the coming code review might focus on the consumer rather than the food suppliers, Mr Jochinke said the NFF believes Dr Emerson should be focussed “on the process and not the production, because we do know his ties to other organisations.”

And secondly, the NFF wants the code reviewer to focus on the whole of the supply chain and not be distracted by focussing only on the check-out and not the farmgate, he said.

“If the supply and demand equation works well and we’ve got good information on whether we are in famine or feast, the consumer should be the beneficiary of that.”


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