AN IN-depth inquiry of the dairy industry will see companies forced to hand over information.
The Federal Government has today granted the Australian Competition and Consumer Commission extra investigatory powers to undertake the inquiry, which Agriculture Minister Barnaby Joyce says will go “much beyond a market study”.
Mr Joyce made the announcement following this morning’s dairy symposium in Melbourne, where more than 50 dairy representatives — including farmers, processors and retailers — gathered to discuss issues facing the industry.
Dairy farmers and lobby groups had been calling for an industry-wide inquiry in the wake of the current crisis, sparked in April when processors Murray Goulburn and Fonterra implemented retrospective price cuts, and sought to “claw back” the difference from its suppliers.
The ACCC is already undertaking separate investigations into both companies’ actions, with an outcome expected in the next few months. It had previously indicated a dairy industry market study could follow.
However, ACCC agricultural commissioner Mick Keogh said the extra investigatory powers — granted by the Government under the Competition and Consumer Act — would allow the ACCC’s agriculture unit to dig deeper than it would have been able in a market study.
“The ACCC can now require participants in the industry to provide information of a very specific nature,” Mr Keogh said.
“It allows the inquiry to really get to the bottom of a lot of the pricing issues.”
Contractual arrangements and bargaining, the lack of transparency in milk pricing, $1 per litre milk, sharing of risk in the supply chain, and issues surrounding the domestic and global milk markets would all form part of the inquiry.
It will begin in November and likely report back by mid-2017.
Mr Joyce said the extra powers would give the investigation a “more forensic form”.
“Some of the questions you’ve been asking … will be able to be fleshed out in a more substantive way,” he said.
“When you ask, ‘How we do stop this from ever happening again?’, we do it by making sure we get all the information of how this happened in the first instance.”
Mr Joyce would not speculate on outcomes of the inquiry but noted that the ACCC “does have the power to prosecute”.
He anticipated the inquiry would delve deeper into Murray Goulburn, describing the co-operative as “the nub” of the pricing crisis.
Murray Goulburn chair Phillip Tracy — who was also at today’s symposium — said they would “co-operate fully” with the ACCC.
“We have nothing to hide,” he said.
United Dairyfarmers of Victoria president Adam Jenkins said the inquiry announcement was “the great thing to take out of this today”.
“We’ve got a trust and confidence issue and we need to actually rebuild the industry and move forward,” Mr Jenkins said.
“Until you know the problems that are there, you can’t move forward.”
Mr Jenkins said the crisis warranted “serious investigation”.
“You’ve got a supply chain of farmers that are bearing the risk for decions being made up the chain,” he said.
Australian Dairyfarmers acting president David Basham also welcomed the inquiry.
“As (Mr Joyce) just said, as you investigate further, you find more — and as you find more, you might need to investigate further,” he said.
“This is the next logical step, so we’re pleased the Government is continuing on that path.”