supermarkets

Adapted from If Australia wants a dairy industry, we must re-regulate now! (18/101/9) Media Release | Citizens Electoral Council

Defying even the expressed wishes of their own customers, Coles and other supermarket chains continue to pay dairy farmers so little that they can then sell that milk for $1 per litre!

With Queensland experiencing a deficit in milk production, One Nation Senator Pauline Hanson has threatened to abstain from lending her support to non-critical legislation until the price of milk is regulated. Between the drought, rising input costs and low farmgate milk prices, Queensland dairy farmers are culling herds or getting out of the game altogether, with the number of dairies in the state collapsing from 1,500 at the time of deregulation, to 385 today. Only re-regulating the industry will rescue Australia’s collapsing milk production. Milk production doubled in the two decades from 1980-2000, but since deregulation took effect in 2000 it has fallen consistently. Fourth-generation dairy farmer from Rush Creek in Queensland, Joe Bradley, told Channel 9’s Today program on 25 September that if milk production drops to 8 billion litres as expected this year, it would make a 30 per cent drop since peak production (2002), and Australia would be set to become a net importer of dairy products.

Token efforts by retailers, such as the ten-cent increase to $1-per-litre milk announced under duress in February by duopoly Coles and Woolworths, do not work. The retailers passed on 1.4 cents of that increase to producers, with some processors passing on additional portions, but this miniscule amount made little overall difference to the industry. Supermarkets increased their home brand milk by a further ten cents again in July, due to “whole-of-market cost pressures”, but this rise was not passed onto producers. Nor will government handouts change the trajectory the industry is on.

Senator Hanson’s withdrawal of support for non-urgent parliamentary votes until action is taken, could have a major impact on the government’s agenda, given her position as a cross bencher. She plans to table legislation to regulate the dairy industry in the current parliamentary sitting. Senator Hanson proposed action to save the industry in September 2018, receiving support only from the cross-bench. The same proposal tabled on 15 October as an Urgency Motion, however, received the support of Labor and the Greens, but was opposed by the Liberal-National coalition and the Centre Alliance, resulting in a 30-30 vote.

With input costs increasing—including water and electricity costs, chemicals, and given the drought, especially feed costs—farmers need at least an extra 40 cents per litre to survive. Only the weight of federal legislation can force both retailers and middle men in the industry to pay a price that will ensure the continuation and growth of a critical component of our food security. Currently it is left to market forces, but with a highly perishable product, dairy farmers have no bargaining power—they can’t hold out for higher prices. And despite consumers being willing to pay more to sustain our milk production, no market mechanism will carry that through from retailer to producer. Legislating a minimum farmgate price, based on parity pricing—the price which covers farm inputs plus a margin of profit—will ensure farmers can remain dairying and sustain a vital national industry rather than joining the dole queues.

Break the free market myth

“I don’t get it. What is Coles’ agenda? … and what is the government’s agenda?” demanded Greenmount dairy farmer Scott Priebbenow, speaking with Alan Jones on Sky News on 8 October. With so many farmers leaving the industry or hanging on by a thread, and a government assistance fund not due to be disbursed until July next year, the government’s inaction is inexcusable, he insisted.

The agenda is to advance a handful of corporate players at the expense of the masses. The commitment of both major parties to an economic policy consensus consisting of privatisation, stripping of regulation, market liberalisation and austerity, has destroyed Australia’s productive industries and family farms but boosted big banks and big business. The policies were devised by a global coalition of some 150 thinktanks planted worldwide by the secretive Mont Pelerin Society founded in 1947. Championed by Margaret Thatcher, the approach was unveiled at the 1978 British Conservative Party National Conference by Linda Whetstone, the daughter of leading MPS figure Antony Fisher, who as a devotee of Austrian School economist and MPS founder Friedrich von Hayek co-founded the Institute of Economic Affairs (IEA), the world’s leading MPS thinktank. Gunning for austerity and the stripping of countless pieces of legislation, Whetstone declared: “Don’t let’s go out of our way to help small business, agriculture, the unions, coloured people, women … we cannot help those who cannot help themselves at the moment”.

In Australia the takedown of the productive sector started in earnest under the Hawke and Keating governments. It was directed by four Australian MPS thinktanks: the Centre for Independent Studies (CIS), which von Hayek personally had a role in launching and running; the Institute of Public Affairs (IPA); the Tasman Institute; and the H.R. Nicholls Society, whose boards overlap the big four banks and big business. Described by the Sydney Morning Herald in 2003 as “the most successful, if unheralded, political puppet-master of the past century”, von Hayek himself observed that the most decisive influence over policy “was wielded by intellectuals”, not politicians.

Former Treasurer Joe Hockey exemplified the real agenda of the “free market” and “competition policy”—to provide an advantage to corporate interests, especially monopolies and cartels. “[W]ealth and prosperity are created by the private sector” and governments must not get in the way, Hockey told the Centre for Independent Studies in November 2013. On the other hand, the masses will have to lower their living standards, and the “political challenge will be to convince the electorate of the need for fiscal pain”, he said in his infamous August 2012 “End of Entitlement” speech to the IEA in London.

Abundant markets

The tragedy is, there is a massive market for all of Australia’s dairy production and more, just waiting for us to develop our capability to service it. If the free market functioned as advertised, we would already have taken advantage of the mammoth demand from China and other Asian nations for our milk products. Since a 2008 milk contamination crisis, demand from China for Australian infant formula, for instance, has grown dramatically. While there is strict Chinese regulation to comply with (excluding e-commerce sales on a smaller scale), a number of Australian companies are already profiting handsomely from expanded exports of powdered milk into the country. With a modicum of government facilitation, Australia’s dairy production could take off exponentially. It must begin with re-regulation, however, because if we don’t stop corporations ripping off our farmers soon there won’t be an industry in existence.

On Tuesday, 8 February 2011, Member for the Victorian Opposition, Martin Pakula (ALP) pointed to the effective cartel which a supermarket may form in its own right, in a bad situation for farmers which, to me is a danger signal that cows will suffer even more (although Mr Pakula did not mention the suffering of cows).


"Anyone who has been to Coles or Woolworths in the last few weeks would know of the decision by the retailers to slash the price of their home brand dairy products, and it seems more of this is on the way in regard to baked goods. This has been described in some circles as a win for consumers, but in the longer term I am not sure that will be the case," said Mr Pakula.

Rising prices, falling standards

Like other people I have noticed that prices are rising in supermarkets. The prices for dairy rose markedly during the long period of drought which has only recently been broken by floods. At the same time, I noticed that supermarket brands were far cheaper than other brands of cheese and milk. It was very tempting to buy, for instance, Coles cheddar cheese, because it was several dollars cheaper than something like Crackerbarrel.

The bottom line

I wrestled with my conscience because I knew that the 'bottom line' in the case of dairy products was cows. The cheaper the cheese the worse for the cow. Cows are so badly treated that any worse treatment seems inconceivable, yet there seem no real limits to how badly commerce will treat the creatures it relies on for its bounty. Only government can legislate and enforce better standards for animals, but unfortunately they seem to do the opposite in this country because they focus on so-called efficiency over the meanest standard of decency. Only the other day we published an article on candobetter.net about how industry and government want to change laws to give permission to treat bobby calves so badly that they have a good chance of dying before they even get to market.

The way down

Prices for milk and agricultural product began to rise quickly as population began to grow in Australia and, in Victoria, as the Labor Government joined forces with corporate interests to take over farmland, using strategies like removing control of water from family farms and repackaging it at different prices according to opaque measurements of industry values. Corporate bidding pushed up land-prices and this eroded profit margins for farmers. If the price of land goes up, everything else does. Who pays - besides the farmer? Livestock do. Only the big corporate agricultural holdings can survive and then only in the short-term, but the corporates are only there for the short-term, to make a killing.

Prices continue to rise as widespread damages to agriculture surface with Australia's massive floods.

How low can you go?

I know it can get even worse for cows because in the US they are sometimes milked as frequently as four times a day, causing their skeletons to break down[1] and they die or are killed around the age of four. Imagine the arthritic pain of constantly breaking bones.

Something better

In Australia cows often live to be eight. A very old cow may reach twelve. Some cows, however, have lived to be over 30. (Here is a lovely story about one in Australia who was saved by a livestock agent and resides with an abattoir owner.) Search and you will find the same for many other species. Such discrepancies in life-expectancy are an indication of how bad the effect of our industrial 'efficiencies' is for non-humans (and not so great for humans either.)

Below is Mr Paluka's statement, which describes a big problem in the centralisation of markets where individual farmers are disempowered by the more easily self-organising retailers.

In the end, supermarkets remove choice

On Tuesday, 8 February 2011, Member for the Victorian Opposition, Martin Pakula (ALP) pointed to the effective cartel which a supermarket may form in its own right, in a bad situation for farmers which, to me is a danger signal that cows will suffer even more (although Mr Pakula did not mention the suffering of cows).

"Anyone who has been to Coles or Woolworths in the last few weeks would know of the decision by the retailers to slash the price of their home brand dairy products, and it seems more of this is on the way in regard to baked goods. This has been described in some circles as a win for consumers, but in the longer term I am not sure that will be the case.

The retailers have enormous market power, far more than the multinationals that Coles CEO Ian McLeod talks about, and they use it ruthlessly. Many of the manufacturers who supply branded products — like Pauls, Pura, Devondale, Western Star and the like — also supply Coles and Woolies home brand products.

So the retailers saying they will not cut the price paid to suppliers for branded products is hardly the point. As supply contracts expire, the substitution to home brand products will inevitably impact on the price paid to manufacturers, the security of hundreds of Victorian jobs and the viability of primary producers as well. If the dairy suppliers got together and agreed not to sell to the retailers at a price below X, they would almost certainly be prosecuted by the Australian Competition and Consumer Commission for collusion and would more than likely be convicted. But the behaviour of the retailers looks a little bit like predatory pricing, and perhaps it is time the ACCC took a look at that as well."

Martin Pakula (ALP) was appointed Minister for Industry and Trade and Industrial Relations in 2008. In January 2010, he became Minister for Public Transport. He is currently in the opposition.

MEMBERS STATEMENTS, Legislative Council, Victoria,
Tuesday, 8 February 2011, Hansardp.93, http://www.parliament.vic.gov.au/images/stories/daily-hansard/Council_2011/Council_Dec_2010-Jun_2011_Weekly_Book_2.pdf

NOTES

[1] "Nutritional Disorders
Numerous diseases and conditions can occur within a cow’s skeletal system if the cow’s immune system is weak or if the cow is malnourished. Milk fever is one condition that affects cows when calcium leaves the bloodstream to support milk production faster than calcium is put back into the bloodstream through eating. The result is a muscular and skeletal breakdown, resulting in the cow being weak and unable to stand. Ketosis is another disorder that affects female cows in early lactation. By drawing body fat to help meet the energy needs of milk production, central nervous systems can become dysfunctional, causing cows to stumble, lose their appetite and become weak."

Source: Alicia Howe, "Skeletal System of a Cow"