ACCC targets dollar milk war

THE Australian Competition and Consumer Commission has broadened its dairy industry inquiry to look at whether big supermarkets and their dollar milk war is killing the nation's dairy industry.

Federal Agriculture Minister Barnaby Joyce announced the move last week, coming good on a pre-election promise to push for greater scrutiny of the big supermarkets and the downward pressure they placed on farm gate prices.

Most of the milk produced by the Queensland dairy industry is sold to either Woolworths or Coles.

Starting in November, the inquiry will investigate sharing risk along the supply chain, supply agreements and contracts, competition, bargaining and trading practices in the industry, and the effect of world and retail prices on profitability.

Coolabunia dairy farmer and Queensland Dairyfarmers' Organisation president Brian Tessmann welcomed the announcement and said he hoped it would halt the decline of Queensland's milk industry.

"We've been pushing for this ever since the dollar milk started in 2011," Mr Tessmann said.

"But it's been a long process."

He said the dollar milk war had driven South Burnett dairy farmers to the brink.

"Since it started on Australian Day 2012, 160 farmers have left the industry and we've seen a significant increase in milk coming from interstate," Mr Tessmann said.

"There's been a steady flow out of the industry.

"Everyone knows a farmer that's left the industry."

Mr Tessmann said the price of milk had dropped to a 23-year low and if the Federal Government did not move to reverse this trend, the South Burnett could be in for some rough years, as dairy, despite its hardships, was still one of the region's major industries.

"If we get good legislation out of the inquiry, the farmers we have now will stay and expand and a few more may join," he said.

"There's certainly a lot of potential, we just need to get through these domestic issues.

"We've always lived through international market issues - it's the domestic we have to worry about."

Mr Tessmann said the true shame of the past five years was the lost potential for growth.

"The Chinese are still really looking for milk, we have an expanding population and a real chance to grow the industry."