As supermarkets come under fire for their confusing price promotions and other devious tactics, Australian Dairy Farmers (ADF) has welcomed an independent report recommending the major players should be subject to tighter scrutiny.
Dr Craig Emerson is heading up a review of the (voluntary) Food and Grocery Code (FGC) of Conduct and recently delivered an interim report on preliminary findings.
Like our very own Dairy Code of Conduct, the Australian Competition and Consumer Commission (ACCC) says the FGC was intended to "improve standards of business behaviour in the food and grocery sector".
"This includes the conduct of retailers and wholesalers towards suppliers." Sound familiar?
ADF's submission to the FGC review process is referenced twice in Dr Emerson's interim report which ultimately, and in line with ADF's submission, "firmly recommends" the code be made mandatory.
Dr Emerson recommended that "the (FGC) be made mandatory and apply to all supermarkets with annual revenues exceeding $5 billion, which at present are Coles, Woolworths and ALDI, and wholesaler, Metcash".
Strengthening code
He recommended the FGC be "strengthened to better protect suppliers, with new protections against retribution, since suppliers' fear of retribution compromises the code's effectiveness".
We sought to ensure any changes to the FGC don't have perverse outcomes that impact Australian consumption of dairy, which is critical for our overall nutrition.
- Ben Bennett, ADF president
Penalties for non-compliance of up to $10 million (or 10 per cent of turnover), greater emphasis on addressing suppliers' fear of retribution for speaking out against supermarkets, and the implementation of a complaints mechanism and code supervisor are among his "firm" recommendations.
In our submission, we said it was clear the FGC holds insufficient power and did not provide the ACCC with the authority needed to force signatories to comply with its requirements.
We sought to ensure any changes to the FGC don't have perverse outcomes that impact Australian consumption of dairy, which is critical for our overall nutrition.
ADF highlighted the fact that there is potential overlap between the Dairy Code of Conduct and the FGC, and that both had concurrent reviews underway.
It's important to ensure changes to the FGC don't water down the Dairy Code of Conduct, and that the dairy code remain a standalone code that applies to the relationship between dairy farmers and dairy processors; while the FGC applies to that of retailers, wholesalers and their suppliers.
In our submission, we reiterated ADF does not wish to see any detrimental or perverse outcomes of the FGC, such as a further decline in retail milk prices (as was experienced through the $1/litre milk campaign).
Australia's milk supply has declined 30 per cent over the past 25 years - an issue which has been acknowledged by the Federal Government's own Food Security Inquiry, which highlighted the need to increase supply of dairy.
In that inquiry, the committee found dairy was one of two sectors that needed particular "attention" from government, and that a "specific strategy for reinvigorating the Australian dairy industry should be developed".
After all, dairy is one of the most nutritious food groups consumed by the vast majority of Australian households. We need to ensure we maintain Australian domestic production.
Dairy work continues
Seeing the validation of ADF's call to have the FGC made mandatory is a major milestone in our work to bring about fairer dealings along the dairy supply chain.
But that work is far from over. ADF was recently involved in a roundtable with the federal government and Dr Emerson, exploring various aspects of the FGC.
We discussed protections for fresh produce, dispute resolution, mechanisms to address retribution and enforcement and penalties - all the while putting forward the case of dairy farmers.
While the FGC review has not yet concluded, and these positive signals are contained only in an interim report, we take this recognition of the imbalance of power as a positive signal for Australian dairy.
Courage needed
Consultation has just wrapped up on Dr Emerson's interim report, and ADF has formally reiterated its support for his findings while re-affirming that the FGC should remain independent of the Dairy Code.
We hope, for the sustainability of Australian dairy, that governments continue to have the courage to hold the country's big supermarkets to account and ensure they behave scrupulously.
Dairy farmers know all too well the devastating impact their behaviour can have on farming families. The $1/litre milk campaign caused the industry significant pain.
Thirteen years on from the day Coles started the $1/litre milk wars, a litre of home brand milk today is only marginally ahead of where it would have been, had the $1 price tag increased in line with inflation over the same timeframe.
Let's hope we one day reflect on Dr Emerson's final report as a turning point in supermarket-supplier relations.
