The Australian Competition and Consumer Commission (ACCC) review of the dairy industry over the last six months has concluded that the effects of de-regulation since it was implemented last June have been a double-edged sword.
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Consumers are the winners, with the price of milk plummeting by as much as 40 cents a litre, but the situation has dramatically worsened for dairy farmers and small store owners, who are loosing out with lower profits.
ACCC chairman Allan Fels commented today that increasing numbers of Australians now purchase their milk from supermarkets in a bid to take advantage of even lower prices in bulk packs. He revealed that the ACCC would be watching out for “predatory behaviour” among the multiples however, as while the supermarket competition is a positive effect for consumers, it is squeezing smaller retailers and farmers out of business.
This trend is also noted by Jonathon Fowlers, spokesman for the Small Business Association of Australia, who commented: “It’s demoralising, [supermarket milk] is under-priced. If its not urgent people won’t buy milk at the corner store. Then supermarkets use their muscle to force dairy farmers to reduce their milk prices even further.”
Fels maintained however that it is important to weigh up the benefits to consumers against the costs to smaller businesses. Nevertheless, “There is no question consumers are the big winners. The old price of milk was artificially inflated… It’s obvious there will be further adjustments in price…(but) supermarkets say falls in generic milk prices are here to stay.”
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By GlobalData
