Farmers push for competition reform

Introducing competition across food supply chains has not delivered benefits, according to NSW Farmers , who have called for a review into the National Competition Policy.

According to its report, Competition Policy & Food Supply Chains: Time for a rethink , both farmers and consumers have not been given value or benefits by the change, with the national competition policy in need of urgent reform.

The report contends that the removal of agricultural commercial and marketing arrangements and the inability of governments to provide free trade for agricultural commodities in the global market have further placed Australian producers at a significant competitive disadvantage.

These failures will ultimately negatively affect consumers through less product choice and innovation, volatile pricing and intermittent supply shortages.

The report has been released as part of the NSW Farmers Thinking Agriculture series , which aims to identify key industry issues and opportunities for farmers in NSW.

According to NSW Farmers President James Jackson, the monopoly-like buying power of the supermarkets and processors has been left unchecked by regulators and policymakers alike.

Long-term value is being destroyed in food supply chains due to the undue power of intermediaries who have unfettered access to producers’ cost structures, explains Jackson, as it often squeezed margins below the cost of production.

“The Australian grocery market is the most concentrated in the world,” says Mr Jackson. “The lack of competition has allowed those with power to extract unreasonable economic surplus, hollowed out supply chains and reduced investment in efficiency-enhancing measures.”

The report contains solutions and recommendations to address the supply chain problems identified. These include reforming unconscionable conduct provisions, reviewing the principles of the National Competition Policy to include fairness in business dealings as an explicit consideration and providing regulators and policy makers with resources to adequately undertake compliance and enforcement.

“Australia is in the bottom half of OECD countries with respect to investment in its food and agricultural sectors by government,” Mr Jackson says. “While this paper is not suggesting wholesale introduction of farming subsidies, targeted investments will create a step-change in the agricultural sector.”

“We need reform of the National Competition Policy to give farmers a fighting chance.”