Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Hansard source

This motion before the House today is an important move by the coalition to highlight the concerns of the Australian milk industry over the threat of the current milk price war initiated by Coles, a wholly owned subsidiary of Wesfarmers. This is an issue about sustainability of the dairy industry and, indeed, the future of thousands of Australian dairy farmers. It is also an issue about the integrity of Australia’s competition policy principles and, more specifically, the action by Coles to increase its market share through aggressive discounting of milk.

As the member for Calare has already noted, the Australian dairy industry is currently worth $3.4 billion to the Australian economy and employs approximately 100,000 people. A country the size of Australia should be looking to expand its production of dairy products. We should seek to increase dairy exports and to tap into opportunities which are opening up in Asia. Instead, the actions of Coles could lead to a reduction in the volume of dairy products and a decline in the number of Australians who work in the industry.

The latest threat to the dairy industry needs to be considered in an historical context. Dairy farmers have endured challenging times over the past decade as droughts, floods, price cuts and increased input charges have pushed many to the brink. This latest debacle has seen morale among the dairy industry reached an all-time low. Once again milk producers and processors believe they are the whipping boys because of the actions of big business and the failure of government to act.

The decision by Coles to lower their own brand milk to $1 a litre may appear attractive to consumers, but in reality this is unsustainable and not in our long-term national interest. The common perception amongst dairy farmers is that in an attempt to increase their market share Coles is willing to sacrifice dairy farmers and the future of the Australian dairy industry.

Recently I met with farmers across my electorate, and they raised serious questions over the market power of Coles and this latest advertising gimmick. Attending the forum were farmers Mike Jeffrey and Howard Lee from Kempsey, Allan Ussher, Jim Desmond and Greg Desmond from the Nambucca Valley, Jason Bake from Crossmaglen and Heath Cook and Adam Darley, who are dairy farmers on the Dorrigo Plateau. All these farmers expressed the genuine concern that as a result of the price wars branded dairy products would be forced from the supermarket shelves and it would be the end of those products.

The farmers also believe it is inevitable that supermarkets will place further pressure on milk processors to cut their prices and that processors will have no choice but to reduce the farm gate price paid to farmers. For many dairy farmers this will be the last straw. A further cut in the farm gate price will simply make them unviable, and in the long term that will not be good for consumers. Once Coles has got rid of the market competition, their market power will be greater. They will be able to ramp up the retail cost of milk.

Competition is good for the consumer and good for business, but it is wrong that the actions of Coles will reduce competition in the marketplace through massive discounting which Coles can subsidise by cross-subsidising their losses. Let us not forget the impact of this aggressive marketing on small businesses such as the local corner store and milk vendors, who struggle to buy milk for less than the price that Coles are selling it for in their supermarkets. All these small businesses are equally threatened by the actions of Coles, and this is why all members of the House should support this motion.

The motion calls on the government to refer this matter for investigation by the ACCC and also to support the recent Senate inquiry which was established into the milk price wars. As a prosperous dairy country, we should be exporting our product to the world, but if Coles continues to use their market power to undercut their competitors then our dairy industry will be decimated. This will have long-term consequences for our nation’s food security. It will also impact on the consumer, who inevitably will pay more for milk once competition in the market is reduced. The government must take every action possible to ensure that the activities within competition policy are in the national interest. Instead of allowing Coles to use its market share to drive milk processors and dairy farmers out of business, the government must ensure that vital competition is maintained in the dairy sector.

This is a very important motion. I am delighted to have it debated here in the House tonight. It is vital that we support our local dairy industry to ensure that consumers enjoy high-quality milk into the future and that our dairy industry prospers.

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