Big Supermarkets Have a Dairying History

Revelations this week that big supermarkets may have been faking their price cuts and specials will come as no shock to dairy farmers.

Australian Competition and Consumer Commission has said they are prosecuting both Coles and Woolworths in the Federal Court. It is alleged that the supermarkets raised their prices on a range of items, and then reduced those prices claiming they were now discounted or on special. The fake discounts kept prices at or above the long-term prices for those items – actually a price increase disguised as a discount.

The ACCC says that the conduct they are taking to court involved 266 products for Woolworths at different times across 20 months, and 245 products for Coles at different times across 15 months, and has provided details of several case studies. These included a $3.50 product having its price increased to $5.00 for 22 days, then reduced to $4.50, and promoted as a price cut.

In response to this news, the Prime Minister has said he will prioritise a new mandatory food and grocery code of conduct and introduce legislation by the end of the year imposing multimillion-dollar penalties against supermarket giants who breach the rules.  This new food and grocery code is due to commence in April next year. eastAUSmilk has made several strong submissions to government in support of making that code mandatory, and strengthening it through properly addressing bullying, amongst other changes.

eastAUSmilk is often told by the big supermarkets that they acknowledge the pain caused when they drove farmers to bankruptcy and suicide during the dollar-a-lite milk era, but they say that’s all in the past. They say they’ve changed, but if the ACCC succeeds in their action, it will confirm that the culture of the big supermarkets is the same, and they’ve just shifted targets. In fact, there’s been no review of their business strategies based on the harm they did with dollar-a-litre milk, no update of their internal code of ethics – they’ve just moved on to other ways of making massive profits, and could change strategies again at any time they chose.

eastAUSmilk has called for changes to the Dairy Industry Code to address the impact of big supermarket pricing and margins on the dairy supply chain.  The Commonwealth government has promised to begin their review of the Dairy Industry Code in September, but we expect this to be delayed – slightly – because of the reshuffled Agriculture portfolio.

Mike Smith, eastAUSmilk Government Relations Manager