ADF President Ben Bennett stated unequivocally that combining two major buyers, Lactalis and Fonterra, will inevitably reduce choice and bargaining power for farmers. This, he warns, poses a significant threat to farmgate prices, especially in an environment where milk supply is already contracting. While the ACCC concluded the merger wouldn’t substantially lessen competition, citing differing product mixes and retail buyer power, the ADF staunchly disagrees with this assessment, pointing to existing market limitations.

The ADF highlights several critical issues. First, farmer options are already severely limited in some regions, with the merger potentially leading to areas with only one major buyer. Second, increased market concentration will reduce crucial pricing tension, even if the companies target different contract types. Third, concerns are raised over Lactalis’s past record, including a A$950,000 fine for Dairy Code breaches, underscoring the need for enforceable compliance obligations. Lastly, the ADF fears the deal compounds market dominance along a dairy supply chain already heavily influenced by supermarket giants.

To mitigate these risks, the ADF is urgently calling for court-enforceable undertakings to safeguard dairy farmers. Their key demands include ensuring farmers’ freedom in milk supply, preventing forced exclusivity in contracts, guaranteeing the continued operation of crucial processing sites, and a firm commitment to regular compliance audits of the Dairy Code of Conduct. These measures are seen as vital for preventing further processor consolidation that could harm farmers and undermine supply security.