Senate milk pricing probe

A Senate inquiry into competition and pricing in the Australian dairy industry was held in Perth last Friday.

The inquiry, involving most States, is looking at farm gate milk prices and the reasons behind their dramatic variation.

With prices dropping below the cost of production last year, the Senate's economics committee will also examine the concentration of supermarket supply contracts on market conditions.

In South Australia, farmers threatened to pour milk down the drain in protest at the domestic contract price crash, while dairy farmers in Tasmania have set up a fighting fund to challenge what they say are unfair prices.

Falls in milk prices offered by processors have been blamed on global conditions, but WA producers say this is not good enough because most local product is sold domestically.

In a submission to the inquiry, WAFarmers said a major contributor to poor prices since deregulation was the routine practice of discounting on supermarket shelves.

"It is unclear whether this practice is initiated by the supermarkets or by the processors themselves, as they clamour for a greater market share," WAFarmers said.

"Interestingly, this practice has continued during periods of both over-supply and under-supply of raw milk in this State."

The Senate report is due by February 28.

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