Australian Dairy Farmers (ADF) is calling on the Australian Competition and Consumer Commission to oppose the proposed takeover of two Saputo processing sites by Coles.

The ACCC is set to hand down its ruling on Thursday, September 14, and ADF does not want to see the proposed deal disadvantage dairy farmers or reduce competition in the dairy supply chain.

An ACCC inquiry into bargaining power imbalances in perishable agricultural goods in Australia in 2020 identified information failures and poor transparency in the supply chain.

ADF believes that if the ACCC approves the acquisition, Coles will have a vertically integrated supply chain from farmer to processor, to retailer, to consumer.

“The deal will not improve transparency, bargaining power imbalances, information sharing, or competition — not for farmers, processors, other milk brands, or consumers,” ADF president Rick Gladigau said.

“If the ACCC does approve the Coles acquisition of Saputo sites, ADF calls on the ACCC to ensure that Coles and Saputo provide enforceable undertakings to protect dairy farmers,” he said.

“Further, as per the ACCC’s own recommendations from its Perishable Agricultural Goods Inquiry, the voluntary Food and Grocery Code should be made mandatory for retailers and wholesalers.

“When one of the big two retailers is endeavouring to become more powerful in the supply chain, and processors are calling to review and water-down the Dairy Code of Conduct, it is timely for the ACCC and government to ensure we protect farmers and promote competition — not imbed further systematic power imbalances, lack of transparency, and barriers to competition in the Australian dairy value chain.”

The two Saputo plants Coles want to buy are at Laverton North in Victoria and Erskine Park in NSW.

There are fears the purchase could lead to reduced competition at the whole sale level, impacting milk processors with flow-on effects to farmers in NSW and Queensland.