Farmers - What about our costs?

Monday, February 04, 2008

Farmers are hoping the Competition and Consumer Commission (ACCC) investigation into retail food prices will also target the increasing price gap between farm gate and the retail shelves.
First reports said the inquiry would be focussing primarily on ensuring fair prices for consumers.

Assistant Federal Treasurer, Chris Bowen, however, said last week that the Government has instructed the ACCC to take a broad approach to its inquiry and ensure all aspects of the chain are included — from the farm gate to the checkout counter.

The effectiveness of the Horticulture Code of Conduct and whether the inclusion of other major buyers would improve the effectiveness of the code will come under the inquiry’s microscope.

To do so, the ACCC will consult widely with retailers, businesses along the chain, farmers, consumer groups and other interested parties.

Mr Bowen said the inquiry will consider the current structure of the grocery industry at the supply, wholesale and retail levels.

It will also look at:

• Mergers and acquisitions by the national retailers,

• The nature of competition and grocieries’ pricing practices and

• The factors influencing efficient pricing of inputs along the chain.

Mr Bowen has also asked the ACCC to:

• Advise him by the end of February on how it may deliver a periodic survey of grocery prices at supermarkets for a typical shopping basket,

• Propose how a website on grocery charges could be built and

• Present any other methods that could be used to provide information to the public.

The inquiry will also consider:

• The competitive position of small and independent retailers

• The pricing practices of the national grocery retailers

• Representation of grocery prices to consumers,

• Factors influencing the pricing of inputs along the supply chain for standard grocery items and

• Any impediments to efficient pricing of inputs along the chain.

The ACCC is required to report to Mr Bowen by July 31.

WAFarmers president Trevor De Landgrafft said he was disappointed the inquiry was not designed to assist farmers more.

“It appears that the inquiry is aimed at ensuring consumers are not paying too much for groceries,” Mr De Landgrafft said.

“What is disappointing from our view is that we do not think consumers are paying too much for groceries and that they are getting a fair deal.

“The two major supermarkets compete very heavily on price and any meaningful inquiry needs to look at what profits these supermarkets are making or where there is excessive profit within the value chain.

“There cannot be an investigation into prices without establishing whether or not price gouging is taking place.”

SOURCE: Farm Weekly, WA