ACCC set to deliver “myth busting” analysis of $1/L milk selling

ACCC set to deliver “myth busting” analysis of $1/L milk selling

ACCC Commissioner Mick Keogh.

ACCC Commissioner Mick Keogh.


MICK Keogh has delivered a comprehensive update of the competition watch-dog's oversight and enforcement activities in agricultural supply chains.


MICK Keogh has delivered a comprehensive update of the competition watch-dog's legal enforcement and oversight activities in different troublesome segments of agricultural supply chains.

Mr Keogh - a long term policy analyst and respected commentator at the Australian Farm Institute - is one of seven Australian Competition and Consumer Commission (ACCC) Commissioners and is spearheading its Agricultural Enforcement and Engagement Unit.

He spoke at an Agribusiness Australia forum in Canberra last week providing a frank assessment of current competition issues which carry economic and political consequences, for the farm sector,

That list includes an ongoing inquiry into the dairy supply chain that’s set to deliver a “myth busting” report in terms of dissolving common misconceptions about food retailers selling $1 per litre milk.

Mr Keogh’s talk outlined current and completed investigations by the ACCC’s Agricultural Unit that was implemented with over $11 million, as part of the Coalition government's $4 billion agricultural competitiveness white paper released in mid-2015.

He was appointed as a part-time ACCC Commissioner for a five year term, starting in February 2016.

ACCC Agricultural Focus

  • March 2017 - released a detailed market study into the beef/cattle industry, making recommendations to enhance market competition and supply chain transparency and to reduce anti-competitive conduct.
  • October 2016 - commenced a 12-month inquiry into the competitiveness of the dairy industry’s supply chain and pricing transparency, that’s due to report later this year
  • Oversight of revised Horticulture Code of Conduct that came into force in April this year and holding regional workshops to educate growers on their rights and obligations
  • Assessment of agricultural supply chain contracts in relation to the federal government’s new laws to resolve unfair contract terms, which commenced in November 2016
  • Advancing the legal claim against Murray Goulburn and two of its executives in response to last year’s dairy farm-gate pricing crisis
  • Oversight of wheat port access code that aims to prevent anti-competitive monopoly conduct by bulk grain handlers – currently being reviewed by Department of Agriculture and Water Resources
  • Enforcement of new Country of Origin Labelling laws introduced by the Coalition government
  • Monitoring progress of changes to Section 46 (competition law) to introduce the ‘effects test’ to try to curtail anti-competitive conduct; especially in the retail grocery market
  • Introduction of an anonymous “whistleblower” reporting service to identify complaints about anti-competitive conduct in areas like horticulture, where growers may feel threatened by loss of business, to bigger and more powerful suppliers etc
  • Not just agriculture – ACCC inquiry into regional telecommunications and mobile phone services
  • Analysis of Murray Darling Basin water market operations and provision of advice to Agriculture and Water Resources Minister

Mr Keogh said there was an “interesting” economic backdrop to his ACCC role, with the farm sector’s gross value of output at about $64 billion or “the highest ever” in 2016-17.

He said agriculture in that same period had also produced a net value output of about $28b meaning it wasn’t just high output but “high margins, relatively speaking”.

Mr Keogh said agriculture was “a real big contributor” to national economic growth “which is surprising for a sector of the economy that is only 2.5 percent”.

“It’s certainly an interesting time for those involved in agriculture and a rare time in some respects in that it is unusual to see agriculture and agribusiness making headlines on a regular basis for positive reasons rather than negative reasons such a drought or farmers that are going out of business,” he said.

“The other interesting backdrop is that I think you could characterise the sector as broadly moving from a commodity producer to a consumer products producer.

“That’s an interesting concept.

“It starts to introduce issues around providence and credence and labelling and demanding a premium price for certain products, or being able to demand a premium for certain products.

“Certainly the notion that Australia would become the ‘food bowl of Asia’ has been replaced by the notion that we could be the ‘food boutique’ or the ‘delicatessen of Asia’.

“That’s certainly more realistic, given the constraints of total production and all those sorts of things and the potential volume of demand that is emanating from the emerging middle classes in a lot of the countries of the world.

“That backdrop is useful in the context of the role I play at the Australian Competition and Consumer Commission because while there’s no such thing as an Agriculture Commissioner – I am just one of several commissioners – certainly my focus and a lot of the work I do is around the agriculture sector and maintaining and improving the competition in the agriculture sector.

“Of course, that has the ultimate aim of increasing the level of output and profitability and economic output of the sector to the rest of the economy.”

Mr Keogh said the ACCC’s work exploring competition issues in the dairy industry was of note, given the “major stepdown in prices” that occurred in April 2016 and the actions of a number of dairy companies in effectively making those price step downs retrograde, back to the start of that year.

He said that was the trigger point for “some major upheaval in the dairy industry”.

“The outcomes of that were, and still are, an ACCC legal case that’s seeking to prosecute both Murray Goulburn and the managing director and the chief financial officer of Murray Goulburn for essentially misleading with deceptive conduct and unconscionable conduct,” he said.

“The ACCC is claiming that they were aware that the information they were providing to farmers, in regards to prices and conditions in the market, was not correct and they should have known and should have made the information more correctly available to farmers and therefore reduced the potential harm that occurred as a result of that.

“Of course that has had a sequence of consequences beyond just that particular incident.”

Mr Keogh said the Murray Goulburn litigation was “ongoing” but would be under some consideration, given the company’s potential takeover by Saputo, as announced in recent weeks.

“Saputo as it has been reported are taking over Murray Goulburn – the assets of Murray Goulburn, not Murray Goulburn itself - and there will be a shell left, so there will be an issue there I suspect at some stage about whether that litigation continues or not or whether there is value in continuing with that,” he said.

Mr Keogh said the ACCC was asked to conduct an inquiry into the dairy sector and look at a range of different factors mainly focused around competition.

But he said the examination was also looking at the impact of various other elements like $1 per litre milk, export markets, contracting processes between dairy farmers and dairy processors and “those types of issues”.

“That process in underway and is reaching its conclusion to some degree in that whilst there has been a delay, we now intend to release that report by the end of November,” he said.

“There will be a consolation phase associated with that and then a final report wrapped up by about April next year.”

Mr Keogh said the dairy investigation process and report was commissioned by the government which meant the ACCC was given “mandatory information powers”.

“The ACCC was able to go to the various protagonists and participants in the industry and actually require them to furnish documentation rather than just provide submissions,” he said.

“It will be, and it has been, a very forensic analysis of; what the margins are in the dairy sector; how competition works; what the impact is for the sector of a whole range of different things including dollar milk; and where there might be potential issues that need to be dealt with.

“I found it a very interesting process and I think that the draft report will have some very interesting aspects to it that perhaps are not necessarily what people might think.”

In a veiled reference to the dairy industry’s long-running complaints, and that of politicians, about the negative impacts of $1 per litre milk of farmer returns, Mr Keogh said the report may deliver some “myth busting”.

“There might be some findings in there that don’t actually accrue to common misconceptions about how things work,” he said.

“But it has certainly been a major effort and an interesting thing and I guess the conclusion will be interesting as well in that the ACCC doesn’t make policy, it only makes recommendations.

“Ultimately it will be down to governments about what actions they take in relation to the findings of that report.

“Certainly, I think it will be a useful step along in the transition of the dairy sector from the regulated sector that it was in 2002 to essentially a largely unregulated sector as it now works, or perhaps doesn’t quite work, as some would argue.”


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