Over the years I have watched with great interest the information given to the ACCC, Senate and other government enquiries which does not even stand up to basic scrutiny.
The first interest was an enquiry conducted in 2007 that is called by the then Minister of agriculture, Peter McGauran, who was concerned that the price of beef was at record prices on retail shelves whilst farmers were getting record lows for their product. Cole’s for their part came forward and suggested that the producer got 54% of the final retail price, 13% when to the processing and 30% went into retail costs. When this and many other statements were brought to the attention of the ACCC, they simply said this was a desktop study and the information used may not have been correct. It was interesting to watch another ACCC enquiry, which was a full-blown enquiry in 2008 using information from the 2007 desktop study, was used again at a Senate enquiry in 2015 by Australia’s biggest meat processor.
The fact is that ACCC found no problems across the supply chain and that farm prices typically reflect the competitive market conditions. ACCC stated that Coles and Woolworths are tough to deal with as there is no across-the-board evidence to indicate that there are structural problems across the supply chain.
The ACCC went on to say that there is no doubt that food prices have risen. By 2008 drought had obviously affected the supply chain. In 2007 Woolworths claimed that the price of grain had affected the price they paid for cattle. This was simply rubbish as producers supplying cattle to Woolworth through small feedlots were told the price of cattle into feedlots had gone down so drastically that this more than compensated for the increase in grain prices. Woolworths did not pay any more for their cattle.
Woolworth claim that without their super efficiency consumers would be paying much more in their weekly shopping bills. This could be correct; however the large supermarkets have become extremely powerful and are not frightened to use that power to push prices to producers down
In 2012 parliamentary enquiry, chaired by Dick Adams, Coles stated that between half and two thirds of the retail dollar went back to the producer. For their part Woolworth were a little bit more careful saying it is very difficult to actually give a percent share of who got what. I would be very certain that Woolworths would know exactly who gets what along the supply chain.
Though Coles maintain that earnings before interest is generally about $.03-$.06 in the dollar.
By 2014, after all enquiries, Cole’s admitted unconscionable conduct and compensated producers to the tune of $20 million. One has got to wonder where or why these enquiries got it so wrong.
To my way of thinking a lot of the blame rests with peak councils. In a lot of cases they are broke and ineffectual and more concerned about their self-survival than doing the job they are set up to do.
Even worse where we have enquiries by ACCC, Senate and other government instrumentalities, processors and supermarkets have tentacles into government and have the ‘where for all’ to make contributions towards political parties. Whilst some peak Councils rely on life-support and scraps from the table. Until we can change the situation producers will always be at the bottom of the pile despite the massive amounts of statutory levies they pay on an annual basis.