May 14th 2011

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Articles from this issue:

EDITORIAL: The death of Islamic terrorism?

CANBERRA OBSERVED: Can Julia Gillard deliver on her three core commitments?

NATIONAL AFFAIRS: Growing anger at supermarket price war

NEW SOUTH WALES: NSW Liberals set new course

CHILDCARE: Exposing the lies in the childcare funding debate

RESEARCH PROJECT: Australia's food security under threat

CARBON TAX: Remorseless killers of our industries and jobs

MILITARY: Dispatching women into frontline combat

MARINE SCIENCE: Bluefin tuna: an endangered species?

FOREIGN AFFAIRS: Prime Minister Gillard kowtows to China

CHINA: China's economy at risk of debt crisis

UNITED STATES: PC intimidation threatens the rule of law

HISTORY: The long debate on how to alleviate poverty

IMMIGRATION: The vexed question of illegal immigration

OPINION: An inglorious tale of guile, envy and deceit

BOOK REVIEW: The deceivers and the deceived

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Growing anger at supermarket price war

by Damian Wyld

News Weekly, May 14, 2011

The overwhelming market dominance of the Coles-Woolworths duopoly is coming under fresh scrutiny as a milk discount war rages in South Australia.

Many consumers are no doubt pleased at being able to purchase milk from supermarkets for as little as $1 per litre.

But how many of them are aware that, upon lowering the price of milk, Coles simultaneously raised the price of around 1,000 other products? Or that Woolies raised the price of around 1,500 other products? (Figures sourced from an independent retailer-commissioned survey).

How many shoppers have noticed familiar brand names rapidly disappearing from shelves, especially in the dairy section, replaced by home-brand products?

Are we approaching a situation where Australian dairy will fade away entirely, to be replaced by long-life and powdered milk imported from China, with “real milk” (which is more costly to refrigerate) considered a luxury item?

These were just a few questions and topics raised at a recent forum entitled Wake Up, Australia!, co-convened by Family First state upper house MP Robert Brokenshire, the South Australian Farmers Federation (SAFF) and the South Australian Dairy Association (SADA).

Present at the meeting, which was held at Parliament House, Adelaide, were representatives from numerous industry bodies, from the National Association of Retail Grocers of Australia (NARGA), and from various retailers, including the IGA (Independent Grocers Alliance), Drake Super-markets and Romeo’s Retail Group (the latter two comprising a large number of Foodland/IGA-affiliated supermarkets).

It was also encouraging to see parliamentarians of all political affiliations in attendance.

Senator Nick Xenophon, Independent senator for South Australia, and others addressed the question: “What can be done to rein in the power of the duopoly?”

The resulting discussion canvassed a range of possible responses, such as launching a campaign of consumer
activism, introducing US-style anti-trust laws to prohibit anti-competitive behaviour (monopoly) and unfair business practices, or demanding more action from the Australian Competition and Consumer Commission (ACCC).

Of the ACCC, one speaker quipped, “People have said the ACCC is asleep at the wheel, but you’ve actually got to be in the car to fall asleep at the wheel!”

Senator Xenophon pointed out that the celebrated 2007 Birdsville Amendment to the Trade Practices Act, which was supposed to target predatory pricing, has yet to be actually tested in a case.

(News Weekly and the National Civic Council have long campaigned for the enactment and strengthening of such laws).

Mr Brokenshire, himself a third-generation dairy farmer from Mount Compass, a small town in SA’s Fleurieu Peninsula, agreed that that the ACCC needed to act. “Private milk labels are wearing the price war hard. Jobs are at risk in an already vulnerable SA jobs market, considering the challenges in manufacturing”, he said.

He also emphasised the need for food security issues to be taken into account.

Dairy participants were keen to stress that they were not seeking re-regulation of the industry, but simply a “fair go” that they are currently being denied.

“We are ringing the bell on the food market today,” said SADA president David Basham. “As the duopoly approaches 80 per cent [market share] and grabs a stranglehold on the market, we say ‘enough is enough’. The price war started on dairy. We felt the impact first and are seeing first the pain for farmers and processors.”

Wrapping up the forum, Mr Brokenshire stressed that this was “just the beginning”. The challenge, as some participants noted, was that there was no magic bullet to solve the problems besetting farmers, independent retailers and other stakeholders. It would take a concerted, national campaign to address the market dominance of Woolworths and Coles.

Maintaining momentum for such a campaign will also be a challenge. Many of those directly affected are busy just trying to stay afloat or — as some suggested — are wary of speaking out for fear of losing their contracts.

In either case, it is in everybody’s interests that the Coles-Woolworths duopoly’s vice-like grip on the market be eased and ultimately wound back.

Only then can genuine free enterprise and competition prevail, with a brighter outlook for direct stakeholders — not to mention the thousands of families, consumers and communities affected.

Damian Wyld is the South Australian president of the National Civic Council.

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