ACCC: Australia’s big milk co-op mislead farmers

Peter Terlato 28 April 2017 NEWS

cow milk

Dairy farmers allegedly quoted overstated price forecasts.

Australia's competition regulator will take milk processing cooperative Murray Goulburn to court over alleged false representations it made to Southern Milk Region dairy farmers regarding pricing forecasts.

The Australian Competition & Consumer Commission (ACCC) alleges Murray Goulburn knowingly provided and maintained average farmgate milk price (FMP) forecasts that were overstated and unachievable during financial year 2015/16.

ACCC chairman Rod Sims said Murray Goulburn misled farmers by representing that it had a reasonable basis for setting and maintaining an opening FMP of $5.60/kg of milk solids and a forecast Final FMP of $6.05/kg, and that it considered this was the most likely outcome, when that was not the case.

"Many farmers are in a relatively vulnerable trading position and rely on transparent pricing information in order to budget effectively and make informed business decisions. In these circumstances, farmers were entitled to expect Murray Goulburn to have a reasonable basis for determining its pricing and to regularly update farmers if there was any change in forecast prices,” ACCC chairman Rod Sims said.

The ACCC says Murray Goulburn's conduct had an adverse business impact on many of these farmers.

The competition regulator is seeking declarations, compliance program orders, corrections and costs from Murray Goulburn but has decided against imposing pecuniary penalties because, as a cooperative, any penalty imposed could directly impact affected farmers.

The ACCC is also continuing to conduct a broader inquiry into the competitiveness, trading practices, and transparency of Australia's dairy industry, with a key focus on FMP pricing, due 1 November 2017.

Last year, a fall in the FMP and the pain felt by dairy farmers, as a result, had many pointing the finger at supermarkets for discounting the price in the so-called "milk wars". However, the suggested solution of raising the price we pay for milk to pass on more profits to farmers has been labelled as misguided.

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