Farmers want Canberra to adopt tough European Union-style trading rules for the food supply chain, including prohibiting buyers from stretching payment terms beyond 30 days, or short notice cancellations.
The sector also wants the competition watchdog's powers beefed up and revamped to stop an already concentrated farm inputs supply sector and agricultural commodity markets becoming more concentrated with even fewer competitive players for farmers to choose from.
Market concentration and the exploitation of market power were threatening the long term viability of many producers and reducing their ability to invest in boosting their own farm productivity, the National Farmers Federation has argued to parliament.
The NFF said the Australian Competition and Consumer Commission needed more resources and more appropriate competition laws to work with to ensure food producers benefited from the same sort of supportive regulation available to food consumers.
We want businesses to flourish across all parts of the supply chain
- Tony Mahar, National Farmers Federation
Addressing a recent round of hearings on competition, economic dynamism and business formation conducted by the House of Representatives, NFF chief executive officer, Tony Mahar, said farmers wanted a transparent, equitable and mutually beneficial supply chain.
"We want businesses to flourish across all parts of the supply chain," he said.
"People are concerned about the economic impact of business consolidation and what is happening in the agricultural supply chain, dampening economic dynamism and competition.
"If we'd had many of these safeguards in place before, or had our time again, a lot of things would be done differently and more fairly."
Among the contentious concerns highlighted by NFF and NSW Farmers in submissions to the competition inquiry was the dramatic decline in poultry sector processing competition.
A decade ago NSW had nine significant chicken meat processing plants owned by six operators.
Mergers have left just two companies, Inghams and Baiada, running four plants from which they supply more than a third of Australia's poultry meat.
"Ingham's and Baiada have progressively and strategically shifted production to where it will be most advantageous for them to grow chickens under contract ... ultimately creating growing hubs and geographic monopsony environments," the NFF's submission said.
Each key NSW and southern Queensland growing region now had just one processor and no alternative market options for growers.
Regulatory failings
"It highlights the failings of the legislative and regulatory powers of the ACCC which has no oversight of how geographical changes and organic business growth influence changes in market concentration," NFF said.
On the other hand, NSW Farmers highlighted how tougher ACCC scrutiny and the introduction of compulsory market codes of conduct, such as the Dairy Code, gave farmers far fairer bargaining powers.
Retail pricing of milk recovered from a depressed level between 2011 and 2018 to more closely follow food price trends after an ACCC dairy inquiry led to a mandatory code of conduct to regulate more transparent raw milk supply agreements offered to farmers by milk processors.
NSW Farmers has also argued for greater analysis of retail price markups and price spreads across food supply chains to diagnose the full extent of anti-competitive behaviour by supermarkets and other supply chain actors.
It noted the supermarkets had the second highest ownership concentration in the retail sector, and according to Reserve Bank of Australia analysis there was a correlation between markups and the concentration of retail business players.
NSW Farmers said Australian competition laws aimed to preserve current competition levels rather than correct inefficiencies or the harmful effects of power imbalances.
Top 10 bad practices
The farm lobby has asked the competition inquiry to carefully consider the EU's rules on unfair agricultural and food supply chain trading practices which prohibit 10 key unfair trade habits.
Bans include payments later than 30 days for perishable crop and livestock products; 60-plus day payments for other farm products; unilateral contract changes by buyers; transferring risks of loss and deterioration to suppliers; misuse of trade secrets by buyers, and payments imposed on farmers not related to a transaction.
"There's a lot of interest in what other countries are doing and it would be remiss of us to not look at those solutions, whether they be over the ditch in New Zealand, in Europe or the US," Mr Mahar said.
Fortunately, he believed there was enthusiasm for competition reform within the federal government.
They (federal government) have made commitments about policy. We think changes could be happening relatively soon
- Tony Mahar, NFF
The NFF was impressed with feedback from Assistant Minister for Competition, Charities and Treasury, Dr Andrew Leigh, and Treasurer, Dr Jim Chalmers.
"They've made commitments about policy. We think changes could be happening relatively soon, before the end of the year," Mr Mahar said.
NFF's reform agenda also extended to better land zoning and planning rules and infrastructure quality, including addressing regulatory costs and barriers to finance.
These hurdles were contributing to rising market concentration, discouraging workforce availability and regional housing, and slowing business formation initiatives and geographic capacity.
Mr Mahar noted how this year's collapse of distribution firm Scotts Refrigerated Logistics and the COVID pandemic had highlighted how too few operators and just-in-time labour and equipment availability had left all Australia vulnerable to the agriculture sector's competition problems.
Public submissions to the competition committee hearings continue in Sydney and Canberra on August 23, 28 and 29.
Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
