GROCERIES ADJUDICATOR

Ms BEDFORD (Florey) (15:37): In May this year Queen Elizabeth II opened the UK parliament with her speech, written by Prime Minister David Cameron, stating her government 'will introduce legislation to establish an independent adjudicator to ensure supermarkets deal fairly and lawfully with suppliers'. Perhaps this is a policy the South Australian parliament should investigate in the interests of our local producers.

The proposed UK bill is being sponsored by the Department for Business Innovation and Skills (BIS), and the adjudicator would be a body independent of government that would ensure protection of direct suppliers, based anywhere in the world, to the large retailers. At the same time, the BIS has said the adjudicator's role should not stifle the consumer benefits delivered by the supermarkets or harm the important role supermarkets have in the economy. The British government is adopting this strategy to ensure the grocery market remains fair and the British farming industry will not continue to erode. From 1996, the number of UK dairy farmers has declined from 34,750 to 14,500, while demand for dairy products is only continuing to rise.

The need for an adjudicator could be relevant in South Australia too because, just as in the UK, suppliers—particularly dairy producers—have been struggling to survive on the reduced prices supermarkets have been demanding. The so-called supermarket price war has driven down the price of commodities so low that some farmers can no longer break even. The dairy industry in Australia is also under strain from the lowering of milk prices. Queensland dairy farmers estimate their incomes have been cut by $50,000 this year as a result of supermarkets selling milk for $1 per litre.

In the UK, similar strain has started to inspire major backlash. The UK National Farmers Union shows it costs about 29p for a farmer to produce a litre of milk, so it is no wonder the farmers are fighting income reduction in such high numbers. British dairy farmers would lose £300,000 in reduced income for the year if the proposed cuts went ahead.

In short, there is no way farmers could afford it. With public support firmly for the farmers, despite the processing plants cooperating with the supermarkets, the proposed new low UK price was dropped in August. However, with the proposed Groceries Adjudicator Bill still to go through the UK parliament, there is nothing stopping supermarkets going offshore to get the cheaper milk price of 24p per litre from Ireland and the rest of Europe, where farmers receive some support from the EU agricultural subsidies. Either way, farmers everywhere are the ones who suffer.

In Australia, farmer unrest has not reached organised protest yet, but that does not mean farmers are not frustrated. Many farmers feel the ACCC has been ineffective in negotiating with supermarkets. They have also looked to federal and state governments for help in controlling the supermarkets' price war and their representative bodies to raise awareness of the issue. It has been reported that the SA Dairy Farmers Association has split from their sister groups, complaining that the national group was 'disorganised' and 'far off track'. The number of dairy farmers has depleted by two-thirds in the past 30 years, and since the beginning of the price war it has been reported that South Australia has lost 300 farmers. Under current circumstances this trend can only continue.

We are lucky both major supermarkets here are still majority Australian owned. However, this should never come at the expense of other Australian family businesses and companies. Latest information from Woolworths assures us in their campaign 'Australia's Fresh Food People' that '100 per cent of fresh meat sold at Woolworths is produced in Australia' and '96 per cent of fresh fruit and vegetables sold at Woolworths are grown on farms in Australia'. However, this does not mean they are preserving the longevity of these farmers' incomes. The only way of sustaining our farmers is by paying them a price that is fair. Dick Smith's Magazine of Forbidden Ideas, which wasrecently banned from News Corp newspapers, stated that one in four vegetable farmers is in financial ruin. Are these the same farmers producing the 96 per cent of fresh fruit and vegetables Woolworths claim to supply in their stores?

Furthermore, the Australian Food Statistic Report has stated that the value of food imports has increased from $3.9 billion in 1990-91 to $10.6 billion in 2010-11. The supermarkets themselves seem at a loss on how they can resolve the situation. Aldi supermarkets, recently arrived in Australia, expressed the view that they had no option but to reduce the price of their milk to remain competitive, despite both Coles and Woolworths denying allegations of a price war. However, Dynamic Business Australia reported a spokesperson for Coles had 'concerns' for the way farmers were being treated, and stated that '[Coles] do prefer to work with farmers rather than against them'. It appears clear that a mediator between the supermarkets and producers would not go amiss to stop excessive undercutting. Competition is good for the Australian economy but should not come at the expense of Australian food suppliers.

Australian farms are important to the economy. One farm can have 50 to 60 suppliers providing machinery, livestock feed and fertilisers. This makes each farm essential to the local economy. The agriculture industry employs 312,000 Australians, 3 per cent of all employed people in Australia, paying around $13 billion a year in salaries and wages. We cannot afford to lose our Australian farmers. Governments need to protect Australian produce and support Australian farmers to protect the future of agriculture. A groceries adjudicator may be a good first step in this strategy. This information on the grocery adjudicator proposal has been prepared from information gathered by Caitlin Spence, and I am indebted to her for her work on this important initiative.