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Wednesday, 15 August 2012
Page: 8749


Ms MARINO (ForrestOpposition Whip) (16:22): I am pleased to speak on this matter of public importance. I was really interested to hear the Assistant Treasurer say that there is no problem and I am interested to note that none of the recent speakers mentioned the words 'producer' or 'farmer'. Obviously they have no idea and no interest. I am a dairy farmer and, as I have said in this House before, a proud one. I have had to deal with the very issue that is before us today. I know exactly what it is like to be the small cog in the big wheel, having to deal with a much larger market player. I put that on the table for members opposite who have not even mentioned producers.

Mr Ian Macfarlane: Real life experience.

Ms MARINO: I have real life experience, that is true, and I have very real concerns, as do the opposition, who have a willingness to work on this issue—the effectiveness of the competition laws in the current situation. We know that competition in Australia in the supermarket sector is paramount. It is important for consumers to keep the prices down, but it is also important for producers, suppliers and farmers because they need to be without the risk of being held to ransom.

We talk about market concentration and bottlenecks in business throughout Australia and the things which basically limit or restrict production. There is a real issue of dominant players in the supply chain through the retail level, which is really where market control is felt. We know about the two food retailing businesses which account for well over 70 per cent of the grocery market—which, by default, gives them extraordinary market power which is felt right down at the grassroots level.

In my experience, the use of this power has fallen on deaf ears at the ACCC. I know what the ACCC's job is, but what really concerns me is that part of its role should be to consider market forces. Surely you cannot maintain an effective supply if there are not commercial forces right throughout the supply chain. In my dealings with the ACCC, I found there was no willingness to deal with this issue or anything to do with market power. As dairy farmers, it is very real and in our faces. We are seeing this with the current issue, milk pricing. The imbalance of market power is felt right at the agricultural level and has been for a long time. The member for Dunkley acknowledged that there are problems and we are going to look at them.

I will never forget the first inquiry that I was part of. A supplier to one of the majors was so worried about the impact of Coles and Woolworths in the market that, to pass evidence on to me, he would meet me only in a car park in Perth where he handed over what were four breaches of the Trade Practices Act. Do you think anything was done about those? No. The ACCC did nothing.

The onus of proof which exists on a small business person like me is to give evidence. I went out and took statutory declarations from every dairy farmer I could get hold of about what was happening. Those statutory declarations all meant nothing as well. And this government says there is not a problem, that there is not an issue. There is a problem and there is a problem with the process as well.

I remember fronting up, as a member of Dairy WA and as a farmer, to the ACCC and saying, 'We really need to develop a milk negotiating agency in Western Australia where it is such a small industry and there are so few farmers.' I remember the absolute contempt with which I was held when I sat in that inquiry with the ACCC on the other side of the table and with 300-odd dairy farmers at my back. They said, 'We're pretty disappointed in the application you've made. We were expecting an application along the lines of what we have had from Air New Zealand and Qantas on a previous matter'—and they were dealing with a group of dairy farmers! Yet those on the other side of the House say there is not a problem, that there is not an issue. I am here to tell you that there is.

Even at recent Senate inquiries there were those who supply the supermarket sector who were not able to give evidence because the very nature of the information they would have given would have identified the contracts they have and they are concerned about retaliation. The concentration of the market gives the large market players power as to whether or not businesses survive. That is what we are dealing with here. So we have some producers who will not front up. It is very difficult to get to the heart of the problem when the very weight of market concentration and market power prevents that from happening.

In the Economics Committee report The impact of supermarket price decisions on the dairy industry we see a statement by National Foods that margins on Home Brand milk are close to zero, with overall profitability on their milk sales, including generic and branded milk, at approximately two per cent.

I would really like to know—and I have asked this question previously—whether there is any cross-subsidisation between the price being paid for generic milk and the price being paid for a branded product. This is just an example. We have heard from the other side that there is no problem, but I would say to you, put yourself in my position. I am a dairy farmer with a perishable product. I do not have a choice to store this product and be able to sell it where and when I like, to whomever I like. There are limited buyers. There are two major supermarkets that buy the product that I have via a processor. But my milk has to be picked up every day. Let me tell those of you who might be thinking maybe there is an issue at the grower level—no, there is not. We have some of the most efficient dairy farmers in the world in Western Australia and they are producing some of the best quality milk in the world most efficiently. So, that is not the issue and yet they are struggling to stay in business.

We have seen the impact of that $1 milk, and we saw it quite strongly in Queensland—the impact was direct and immediate. I look at my fellow dairy farmers and it bothers me—and I know it does not bother the other side—that we are seeing an exodus of great young people with incredible intellectual property built up over generations out of a great industry. There is no value in that from the other side, and so there is no problem. I am here to say that there is a problem, and I am really pleased that we on our side are prepared to look at this and deal with this issue. That is what the member for Dunkley said directly when he was here.

One other thing that bothers me is that we have a National Food Plan, released by the other side, and yet there is no mention of producers or producer viability. It ignores the price-taking nature of the industry—the fact that there are few buyers and market concentration. It ignores the extreme vulnerability of the grower and the small business person. That is what we are as farmers and producers—we are small business people and we are operating in a market where there is market concentration and associated market power.

As I say, when you get those who cannot afford to give evidence because they are scared of retaliation and those who choose to meet me to pass on some information but will only meet me in a car park in Perth, then we do have a problem. I am pleased that on this side of the House we are prepared to look at that problem in a genuine sense. I have fruit growers say to me: 'The price that I am getting currently is barely covering the boxes that I am packing the fruit in.' Those on the other side have said to date that there is not a problem. Well, you try putting yourself in the position of being the price taker at the bottom of the rung—the small business person—and see if there is not a problem with this whole process.