AFTER years of driving down the price of milk, Coles says it will launch a new, more expensive home brand to help struggling dairy farmers. The supermarket chain says proceeds from the as-yet-unnamed brand will go to an independent dairy industry fund to provide direct support to farmers and “invest in innovation to ensure the long-term future of the dairy sector”.
Fonterra and Murray Goulburn have both cut the price they pay farmers for milk solids.
Coles, which says it will forgo any profit on sales of the new brand, will also contribute $1 million to create a sustainable dairy industry fund to administer the initiative.
- The Daily Telegraph, 17th May 2016
No no no no no. Don't try to weasel out of this Coles. As a subsidiary of Wesfarmers, you're part of the 8th biggest company in Australia by market capitalisation, You and Woolworths Limited which is the 9th biggest company in Australia by market capitalisation are willing and able partners in this mess. Or did you some how forget this?
Murray Goulburn has won a five year contract to supply own brand cheese for Coles supermarkets.
The five year deal is expected to have a $130 million payoff to the milk-processor, which edged out rival Bega Cheese for the contract. To deliver the contract, $145 million will be invested to upgrade facilities at the Cobram plant in Victoria. Bega Cheese will now have to find an alternative market for up to $60 million worth of cheese.
Bega Cheese CEO, Aiden Coleman said he expects prices were the dominant factor in the allocation of the contract.
"We went into a competitive tender process at the end of the calendar year and Coles have chosen an alternative supplier based solely on pricing I should imagine," he said.
- ABC News, 1st Feb 2016
Don't think for a second that we out here in consumer land didn't forget this. Most of the ASX 200 is either dirt farming or straight out money farming, and here you are driving down the prices of commodities so that you're literally taking the food from the tables of actual farmers.
You will argue of course that this is just an operation of the market. Praise be! In the great god Dollar we trust. Amen. But markets in and of themselves are capable of producing one and only outcome: a price. They are exactly amoral machines in this process. This does not mean so say though that the actors who operate the machines are exactly amoral. Some exhibit predatory power, some exhibit decidedly immoral behaviour. Forcing a guilt trip on the general public because you exercised that market power as a price maker and engaged the dairy cooperatives into a race to the bottom is hardly the best way to help struggling dairy farmers. This "fund" which you suggest will go towards dairy farmers, is little more than a public relations stunt. It is an actual whitewash.
46. (1) A corporation that is in a position substantially to control a market for goods or services shall not take advantage of the power in relation to that market that it has by virtue of being in that position.
- Section 46, Trade Practices Act (1974)
Now I know that I'm hardly a lawyer but I do have the power of literacy. Section 46 of the Trade Practices Act, which by the way had changes submitted to the parliament by Barnaby Joyce in 2007, was designed to stop things like predatory pricing through this sort of discounting. I don't think that it's much of a stretch to suggest that a subsidiary which is part of a company worth $47 billion "is in a position substantially to control a market for goods or services" and when you're forcing the players in the market to undercut each other to be lead suppliers "based solely on pricing", I think that you've taken considerable advantage of the power in relation to that market.
If you're going to create a fund, or start giving farmers what their produce is actually worth, then don't turn it into some show of virtue. If you don't, then maybe the government might force you to do so.
Federal Agriculture Minister Barnaby Joyce has warned the big supermarkets that unless they axe their $1-a-litre home-brand milk, a re-elected Coalition government will force a price rise.
Mr Joyce’s price threat came as hundreds of dairy farmers rallied in cities, demanding a fairer milk price and an end to their exploitation by big dairy companies and Coles and Woolworths.
“Retailers need to understand the momentum is there nationally for farmers to get a fairer deal, $1-litre milk that is cheaper than bottled water is not fair,” Mr Joyce said. “It is seen now by consumers as a bad thing that rips off farmers; it is affecting (the supermarkets’) good corporate names, so they should change it.
“Retailers don’t want the government to jump on them, but we will if they don’t do anything.”
- The Australian, 26th May 2016
Oh looky here. Who is this again? None other than Barnaby Joyce. This is the same Barnaby Joyce who told Johnny Depp to get his dogs out of Australia because they'd been illegally brought into the country. This is the same Barnaby Joyce who nine years ago, was thinking of farmers in his then state of Queensland, to try and stop this sort of nonsense.
Laws generally exist for the regulation, standardisation and protection of society. In this case the protection of people's livelihoods. In this case its to stop farmers selling the farm so that they don't buy the farm. Government regulation exists in this case, to stop someone from putting the screws into someone else's coffin.
Don't weasel out of this Coles, or else Barnaby Joyce will do what he did to Pistol and Boo to you.