❓ A WA parliamentary question addresses challenges faced by the egg and dairy industries in securing fair returns from supermarkets. The Minister acknowledges the issues and outlines government support, engagement with the ACCC, and ongoing discussions with industry stakeholders.
AnsweredQoN 57Legislative Council
QuestionView source ↗
EGG AND DAIRY INDUSTRIES — SUPERMARKET
PRICING
57. Hon COLIN de GRUSSA to the Minister for Agriculture and
Food:
I refer to ongoing challenges facing both the Western Australian
egg industry and the dairy industry in negotiating a fair return for their
products from the major supermarkets.
(1) What support, if any, is the state government providing
these industries?
(2) What
modelling has been done by the state government about the future viability of
these industries?
(3) What
modelling has been done by the state government on the impact to our state's
economy if these industries cease production?
(4) What
meetings has the government held with producers, processors and supermarkets?
Please provide the dates and attendees.
PRICING
57. Hon COLIN de GRUSSA to the Minister for Agriculture and
Food:
I refer to ongoing challenges facing both the Western Australian
egg industry and the dairy industry in negotiating a fair return for their
products from the major supermarkets.
(1) What support, if any, is the state government providing
these industries?
(2) What
modelling has been done by the state government about the future viability of
these industries?
(3) What
modelling has been done by the state government on the impact to our state's
economy if these industries cease production?
(4) What
meetings has the government held with producers, processors and supermarkets?
Please provide the dates and attendees.
AnswerView source ↗
I thank the member for the question.
(1)–(4)
There is certainly no doubt that high grain prices and, in the case of the
dairy industry, the dry season in 2019 have created real cost challenges for
both those industries. That is part of the problem that they have experienced.
The other part of the problem is that because of the structure of the industry
and the dominance of a few supermarkets in the retail sector, prices do not
change as they should to reflect those realities. Indeed, through their
processes, generally, growers are price takers, not price makers. There
certainly is not sufficient responsiveness to increases in cost in the returns
that are going to those growers. We are deeply engaged in that. We have been
having conversations with the Australian Competition and Consumer Commission
about that.
In respect of the egg industry in
particular, we have also written to Coles, which, in a very controversial way,
shifted to cage-free eggs without giving the industry any meaningful notice to
change its practices. We have met with egg producers on several occasions and
offered them an industry round table. We understand
that if we are going to mount these arguments, we need to have some idea of the
average cost of production. We have offered to fund that study. For some
reason or other, the industry is not particularly concerned about doing such a study, but we continue to try to work with
it. We have certainly been working with the ACCC to ensure that all
those issues and complaints about the mislabelling of free-range eggs are being
dealt with and that active investigation is underway with the ACCC in relation
to that. As I said, we have written to Coles
and we absolutely want to help the egg industry deal with that, but we need to
do that in a logical way. We cannot argue that we are not getting enough
for eggs, unless we have some idea of the cost of production.
In contrast, we have been working
with Western Dairies for a number of years. We have been providing financial
assistance. Late last year, we agreed to extend that financial assistance so
that the industry can continue to understand the costs in the industry and work
to bring them down. That is very constructive. I met with the Western Australian
Farmers Federation dairy council recently and we have discussed what might need
to be done to ensure that we still have a substantial industry that is able to
provide fresh milk. There is no way that the dairy industry will disappear but
it is possible that if we do not do something about
minimum pricing and if we do not have some way of delivering a better price, a number
of producers will probably go out of production and that will compromise
our ability to get cost-effective fresh milk all year round. We have discussed
a range of options. We are certainly not going back to quotas. The industry
does not want us to go back to quotas, but what other control mechanisms might
we put in place to deal with that? We are organising a summit around that.
(1)–(4)
There is certainly no doubt that high grain prices and, in the case of the
dairy industry, the dry season in 2019 have created real cost challenges for
both those industries. That is part of the problem that they have experienced.
The other part of the problem is that because of the structure of the industry
and the dominance of a few supermarkets in the retail sector, prices do not
change as they should to reflect those realities. Indeed, through their
processes, generally, growers are price takers, not price makers. There
certainly is not sufficient responsiveness to increases in cost in the returns
that are going to those growers. We are deeply engaged in that. We have been
having conversations with the Australian Competition and Consumer Commission
about that.
In respect of the egg industry in
particular, we have also written to Coles, which, in a very controversial way,
shifted to cage-free eggs without giving the industry any meaningful notice to
change its practices. We have met with egg producers on several occasions and
offered them an industry round table. We understand
that if we are going to mount these arguments, we need to have some idea of the
average cost of production. We have offered to fund that study. For some
reason or other, the industry is not particularly concerned about doing such a study, but we continue to try to work with
it. We have certainly been working with the ACCC to ensure that all
those issues and complaints about the mislabelling of free-range eggs are being
dealt with and that active investigation is underway with the ACCC in relation
to that. As I said, we have written to Coles
and we absolutely want to help the egg industry deal with that, but we need to
do that in a logical way. We cannot argue that we are not getting enough
for eggs, unless we have some idea of the cost of production.
In contrast, we have been working
with Western Dairies for a number of years. We have been providing financial
assistance. Late last year, we agreed to extend that financial assistance so
that the industry can continue to understand the costs in the industry and work
to bring them down. That is very constructive. I met with the Western Australian
Farmers Federation dairy council recently and we have discussed what might need
to be done to ensure that we still have a substantial industry that is able to
provide fresh milk. There is no way that the dairy industry will disappear but
it is possible that if we do not do something about
minimum pricing and if we do not have some way of delivering a better price, a number
of producers will probably go out of production and that will compromise
our ability to get cost-effective fresh milk all year round. We have discussed
a range of options. We are certainly not going back to quotas. The industry
does not want us to go back to quotas, but what other control mechanisms might
we put in place to deal with that? We are organising a summit around that.
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