Lactalis-Fonterra Deal Approved, But Farmers Warn of Price Squeeze, Reduced Competition.
Tasmanian dairy farmers are expressing significant apprehension following the Australian Competition and Consumer Commission’s (ACCC) approval of the impending merger between Lactalis and Fonterra, two of Australia’s most dominant dairy processors. Grant Archer, a dairy farmer from Bracknell who has supplied both companies, articulated a mix of understanding for Lactalis’s manufacturing expertise alongside profound worry regarding the potential for reduced competition. This consolidation, he fears, could exert downward pressure on already sensitive farmgate milk prices in the region.
Archer highlighted the existing challenge in Tasmania, where the pool of major dairy suppliers is already notably limited, with Saputo, Fonterra, and Lactalis currently comprising the primary options for farmers like himself. The merger’s approval, therefore, intensifies concerns about market concentration and the diminishing number of available buyers for raw milk. This reduction in competitive tension is a core worry for dairy producers navigating complex supply chain dynamics.
Australian Dairy Farmers (ADF) President, Ben Bennett, echoed these sentiments, asserting that the ACCC’s decision poses a considerable risk to processor competition in Tasmania. He warned that this could inevitably curtail choice and significantly diminish the bargaining power of dairy farmers. Given the already shrinking milk pool in the region, the ADF views this as a major threat to the crucial farmgate milk prices that directly impact farmers’ livelihoods and the viability of dairy farming operations.
In response to these grave concerns, the ADF is actively advocating for the implementation of court-enforceable undertakings designed to safeguard the interests of dairy farmers. These critical measures include ensuring no forced exclusivity clauses in contracts, honoring all existing Fonterra milk contracts, guaranteeing the continued operation of vital dairy processing sites, and committing to regular audits to ensure compliance with the dairy code of conduct.
Without the implementation of such robust protections, the ADF warns that the Australian dairy industry faces an elevated risk of further processor consolidation. Such continued vertical integration and market concentration could inflict lasting harm on dairy farmers, eroding their economic stability and potentially undermining the long-term supply security of dairy products in the region. This scenario has significant implications for both dairy economics and the sustainability of agribusiness in Tasmania.
Source: Tasmanian Country: Dairy merger concern farmers
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