Dairying dudded again

Dairy farmers have received another blow with the Australian Competition and Consumer Commission (ACCC) announcing on Friday it has found no evidence that Coles has violated the Competition and Consumer Act by selling $1 a litre milk.

Coles was the first to offer two-litre cartons of milk for $2 in January, sparking copycat moves among its rivals, including Woolworths, and outrage from dairy farmers.

The move prompted a parliamentary inquiry while the ACCC was also asked to step in and examine a possible breach of Australia’s competition laws.

The ACCC said Coles was taking a hit to its profits as a result of selling the $1/litre milk, with the purpose of the supermarket’s price campaign to force down milk prices and increase its market share of milk sales, which was to be expected in a competitive environment.

Coles said in January it planned to keep the $1 price for at least six months, if not longer.

On Monday, Coles announced it would now stick with its $1/litre milk as long as possible to give cash-strapped Australians a helping hand.

“Given the positive customer response, we are committed to keeping prices down for as long as possible, ” Coles managing director Ian McLeod said in a statement.

“Increased milk consumption over the last six months, well above long term trends, shows that both our customers and the dairy industry are winning.”

Queensland Dairy Farmers (QDF) president Brian Tessmann did not agree, saying some of the biggest impacts will be felt by dairy farmers when they negotiate new contracts for the coming year.

He said the QDF was extremely disappointed by the decision by the ACCC, saying its findings were premature.

Mr Tessmann argued that the ACCC had not provided any evidence to back up its findings.

WAFarmers dairy president Peter Evans said WAFarmers and industry were not surprised by the announcement.

“Coles did go to the ACCC before starting this campaign, so they knew what they were doing was OK, ” Mr Evans said.

“This still doesn’t take away from the fact Coles’ behaviour is damaging the dairy industry.”

Mr Evans said Coles $1/litre milk campaign was not only costing farmers but distributors and local convenience stores also.

“The ACCC announcement won’t be helping the confidence of WA dairy farmers, ” he said.

“The figures from the latest Dairy Australia Situation and Outlook survey show confidence in the WA dairy industry is really low and I expect Coles’ discounting of milk is one of the main reasons behind this.”

Mr Evans said the ACCC announcement would not impact on the Senate inquiry findings to come in October with the inquiry waiting to see what impact Coles campaign had on farm gate milk prices.

He said the expectation was the Senate report would be favourable for dairy farmers, however the real issue was if government then acted on these findings.

“If government doesn’t strengthen legislation these type of things will just keep happening, ” Mr Evans said.

The final report by the Senate committee tasked with investigating the milk price war is due by October 1.