Milk: will wheat be next?by News WeeklyNews Weekly
, September 9, 2000
No sooner was the dairy industry deregulated than Woolworths slashed the price of milk in a grab for market share, forcing Franklins and Coles-Myers to follow suit. The big losers are going to be dairy farmers. As Peter Austin commented in The Land, “It was patently obvious total deregulation of the dairy industry ... could result in only one thing: the transfer of market power from the farmers (who need it), to the processors and supermarkets (who don't).
“Woolworths chief executive, Roger Corbett, even went so far as to kid us on national TV that farmers would actually benefit form Woolies’ lower prices, as cheaper milk resulted in increased sales ... Unless, we're all about to follow Cleopatra's example and start bathing in the stuff, rates of consumption will remain a factor of dietary habit not price ... There is a certain irony that Woolworths’ market price cutting move came the very week after a round of public hearings in the National Competition Policy review of the Wheat Marketing Act, which will recommend on the future of the Australian Wheat Board's single desk for export wheat.
“If all milk were marketed by (say) a single, grower-owned co-operative (or company), Woolworths wouldn’t have been able to pull the stunt it did. That was only possible because Woolies (according to reports) was able to play the three processing giants off against each other, much as the Japanese do when buying coal or iron ore. Wheat would be similarly vulnerable in a deregulated market.”