THE potential sale of two interstate dairy processing facilities will be unlikely to affect the South East in the short term, according to Australian Dairy Farmers (ADF).
Supermarket giant Coles is looking to acquire milk two processing plants owned by Saputo Dairy Australia, with one each in New South Wales and Victoria.
The planned sale has been met with concern from the dairy industry, with ADF president Rick Gladigau worried it would affect competition at the farm gate.
However, Mr Gladigau said the sale, if it went ahead, would be unlikely to have any short-term impacts on dairy producers in South Australia.
“The concern will be over Coles growing that market share and then how they operate on the supermarket shelf, because they will have control from farm to retail, which nobody else has,” he said.
“It’s a hard one for the region – if Saputo said they were pulling out of the market, that makes a difference, that would be a real concern for the South East market.”
While the South East would likely be unaffected at first, Mr Gladigau did not rule out possible long-term effects.
He said dairy farmers would need to keep abreast of the situation and put plans in place for the next five to 10 years.
“A lot of it is about, what’s our efficiencies we can gain at farm level in terms of production costs?” he said.
“Given there are other players in the market around there, it’s finding the processor that suits your needs, really, that offers you the price based on how you produce milk.
“Electricity is the biggest one currently hitting us, then we look at fertiliser efficiencies and composting, reuse of waste.”
Mr Gladigau also said those were only possibilities, though, with the Australian Competition and Consumer Commission (ACCC) releasing a Statement of Issues on the planned sale.
“We’re pleased to see ACCC have got this statement of intent about it, because it does show they haven’t just ticked the box and said yes or no,” he said.
“We want competition at the farm gate level – we need it to maintain a good price.”
ACCC deputy chair Mick Keogh said they are considering the possible ramifications for the dairy industry if the sale goes through.
“We have heard strong concerns across the industry about how the acquisition will strengthen Coles’s position in the dairy supply chain,” Mr Keogh said.
“Many industry participants have expressed concerns that the acquisition will result in Coles consolidating its private label milk production, which would increase its bargaining power in negotiations with dairy processors and dairy wholesalers.”
