DEREGULATION has not delivered its promised benefits to farmers, says MEG PARKINSON
The definition of a monopoly and an oligopoly are generally understood.
But farmers' problems are not so much about monopolies but monopsonies.
Monopsony power is where there is one buyer of a product.
Oligopsony power is where there are so few buyers for a product that one buyer's actions can have a significant impact on prices and the market in general.
The old agricultural marketing boards were the only buyer of a commodity.
When agriculture was deregulated, we were told that it would benefit consumers by lowering the price they paid for the product.
This did not happen.
Deregulation benefited the customers of the farmer or the customers of the processor of the product.
The major supermarkets, large fast-food restaurants, milk processors, grain-marketing companies, meat processors and so on are, in my opinion, buyers whose actions can have a significant impact on prices to farmers.
The only exceptions to this are co-operatives where the profit flows through to the farmer owners.
Various parts of government will tell you that it has been difficult for them to legislate against the power of buyers when government marketing boards existed, as they are the same.
To farmers this is not so. We had a large influence on marketing boards.
We negotiated prices, elected farmer representatives to the boards and we were listened to and our views taken into account.
This is not how powerful buyers in a deregulated economy work.
Not only are our views not taken into account, we are not even part of the debate.
We feel that we are just cogs in a wheel whose profit is siphoned off by those using our products to make their own, often substantial, profit.
This is power. What can we do about it?
First: Use template contracts, which are available to ensure that the power is more balanced. There is such a template in the Produce and Grocery Industry Code.
All the supermarkets and fast-food restaurants are signatories to this code, as are all Victorian Farmers Federation members.
Second: Use the processes that are already available to resolve disputes when they arise.
We have the Produce and Grocery Industry Ombudsman, the Horticultural Industry Ombudsman, government Dispute Mediation services and the Small Business Commission.
Third: Use Consumer Affairs and the Australian Competition and Consumer Commission when we have a verifiable complaint.
Fourth: If we want collective marketing or bargaining power, we need to organise it for ourselves within the bounds of the Trade Practices Act.
Co-operatives are one way but there are other ways of dealing with activities previously done with or under the auspices of marketing boards.
For example, the VFF Chicken Meat Group bargains production contracts on behalf of members.
The VFF Grains Group is becoming more focused on giving members information and skills in the marketing of grain, and Free Range Egg and Poultry Australia deals with the certification of products under the requirements of the Trade Practices Act.
Some farmers are moving into value adding their products and taking them outside the oligopsony. This can be successful but requires long hours, is expensive, cannot work for all commodities and rarely moves large amount of products.
So what else can we do? Increasing the powers of the ACCC may help but farmers need to be able to give the ACCC documents.
To do this we need to be certain that we will not suffer intimidation in any form.
This is the point government must address if it is serious about solving this issue.
If you could be intimidated by putting your views in writing, please contact me and let me know.
- Meg Parkinson is a Gippsland egg producer and former vice-president of the Victorian Farmers Federation.
