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ACCC Inquiry to quash food pricing myths

17 March 2008

CONSUMERS – increasingly attuned to rising food bills – are justified in wanting to know what is driving higher food prices. Likewise, Australian farmers are just as eager for the Australian Competition and Consumer Commission (ACCC) to get to the bottom of where the money is going, the National Farmers’ Federation (NFF) said today.

“The truth is farmers only ever receive a small portion of the price paid at the check-out,” NFF Vice-President Charles Burke said as the NFF lodged its submission to the ACCC Grocery Inquiry. “There appears to be an increasing gap between farm-gate and retail prices, therefore, this is a good opportunity to find out exactly what is happening in the supply chain.

“Yet, we must be mindful that the intent of this Inquiry is not to simply look to reduce prices. Farmers, as price-takers, cannot be squeezed further for producing value-for-money food.

“Farmers expect issues such as transparency, competition and fairness through the complete supply chain analysed by the ACCC to ensure farmers do not cop any impact of price reductions at the retail end.

“Any attempt to reduce costs at the expense of what farmers get paid misses the point of this Inquiry – which is more about ensuring transparency through the complete food supply chain.

“Our farmers are proud of the safe, carbon-friendly food production they supply for Australians, everyday. We lead the world in agricultural innovation, creating and implementing cutting-edge technologies and developing new environmentally-sustainable farm systems.

“Australian agriculture has doubled its productivity over the past 14 years, averaging annual productivity growth of 3.8%, while also leading the way in reducing carbon emission by 40%. Overwhelmingly, agricultural commodity prices are set by the global marketplace, forcing Australian farmers to remain internationally-competitive in producing quality and affordable food.

“Consumers, in turn, must be aware that sometimes the costs involved in producing around 93% of the food on supermarket shelves, and increasingly meeting demands for additional production features, such as environmental impacts, ultimately, mean higher prices.

“There is a false assumption that our severe drought is the sole or even major driver behind higher food prices. This is simply not the case. Drought does not always lead to price hikes, nor will food prices automatically recede when seasonal conditions improve.

“The ACCC must look at the complex set of drivers that underpin domestic food prices. These include global food shortages, international economic and population booms and new competition for traditional food supplies from the burgeoning biofuels sector.

“It is important that the ACCC’s Inquiry gives consumers a full account and clearer picture of where their hard earned money is going.”

[ENDS]

The NFF’s submission to the ACCC is available at: Submissions to Government

Media Enquiries: Brett Heffernan on (02) 6273 3855 or 0408 448 250.

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