The article below first appeared at on September 11. Claire Parfitt is a research student at the University of Sydney. She is affiliated with the Australian Food Sovereignty Alliance and is a coordinator of the People's Food Plan project.
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The Federal Government鈥檚 current process is heavily dominated by business interests. It is built on flawed assumptions that the market can provide the solutions that our broken food system sorely needs.
Australia鈥檚 food system, like the , is dominated by a handful of corporate players in pursuit of profit. Far from the rhetoric of 鈥渇ree鈥 and 鈥渃ompetitive鈥 markets, our food economy is governed by an oligopoly of private interests.
(Super)market domination
Concentration of economic power in the Australian agrifood system is probably best understood through the example of the supermarket duopoly of Coles and Woolworths, . Lesser-known corporate giants include , which became Australia鈥檚 largest grain trader when it purchased the privatised Australian Wheat Board in 2011.
Since deregulation of the dairy industry, one multinational food and beverage company, Kirin, controls around 80% of , forcing out farmer-run cooperatives. Two companies, Weston Foods and Goodman Fielder, control more than half of the bread and bakery markets.
Private control of agriculture, food processing and retailing means that decisions about what food is produced, how it is processed and where it is sold are driven by profit motive, and not by human needs. Moreover, the huge market share controlled by the small number of companies that dominate Australia鈥檚 food system creates the potential abuse of market power.
Farmers' struggle
Farmers feel this impact of market power keenly. As suppliers to the two big supermarket chains, and to companies like Kirin in the milk market, farmers are forced to accept lower and lower prices in order to win supply contracts. In the milk sector, since deregulation in the early 2000s. The start of the so-called between Coles and Woolworths in early 2011, pushing milk retail prices to $1 per litre, only exacerbates this downward pressure on farmgate prices.
In addition to low prices, farmers are forced to meet exacting standards regarding the appearance of fruit and vegetables, to package and label produce at their own expense, and risk having produce returned at the whim of the retailer. Negotiations between supermarkets and their suppliers are not transparent and the resulting contracts, with no standard terms of trade, provide little consistency for suppliers. At times, suppliers are notified of the prices they will be paid .
It is not only farmers who suffer as a result of the enormous economic power of the handful of companies that dominate the food system. A working for Coles earlier this year found that the majority felt pressure to drive above the speed limit in order to meet the company鈥檚 demands.
Drivers were forced to work for hundreds of unpaid hours per year, waiting in delivery lines, and loading and unloading cargo. Health and safety standards dropped, putting workers鈥 lives at risk, when the company failed to allow sufficient time for vehicle repairs.
Need for change
It is unacceptable that powerful food companies obtain profits by extracting unreasonable concessions from primary producers and workers in the food system. This imbalance of economic power undermines farmer and rural livelihoods, and threatens the future of Australia鈥檚 food production industries.
There has been significant discussion in Australia of the power of the supermarket duopoly. The ACCC issued an astonishing , which pronounced the retail industry sufficiently competitive, despite the two largest retailers controlling, at the time, 70% of grocery sales, 50% of fresh fruit and vegetable sales and 60% of all supermarket stores.
Nonetheless, the ACCC did find that some adjustment measures were required, such as lowering barriers to entry for other firms. There has been little progress on this point as Coles and Woolworths have further consolidated their market positions and are refusing to agree to a more 鈥渟treamlined鈥 process proposed by the ACCC for approving mergers and acquisitions. The retailers are reportedly concerned that the new process will enable the ACCC to block deals and .
Amid many complaints from farmers and other industry stakeholders, the ACCC鈥檚 new Chairman has made several attempts to curb the duopolists' power, including the streamlined approval process for acquisitions. The ACCC has also investigated claims of unconscionable conduct regarding suppliers and misuse of market power regarding private label products. The outcome of these initiatives is yet to be seen.
The national food plan process has been particularly dismissive of concerns regarding the . The government has refused to intervene in the relationships between Coles and Woolworths and their suppliers, preferring to 鈥渓et the market decide鈥.
The Australian Food Sovereignty Alliance decided in early 2012, after seeking to engage with the government鈥檚 flawed food plan process, to initiate the 鈥淧eople鈥檚 Food Plan鈥 project. The to provide adequate access to the public for consultation and prioritises the needs of the market over the needs of the people who depend on the system. In contrast, the People鈥檚 Food Plan questions the dominance of corporate interests and the market-driven nature of the food system, opening the door to the kind of transformative .
The first People's Food Plan forum took place this week at Bondi. 聽Around 30 people met over a meal to talk about their personal experiences with the food system, what they would like to change and why. 聽
More of these discussion events will be held all around the country, so get in touch with the if you are keen to have your say and get involved.聽
[The People鈥檚 Food Plan involves community meetings throughout Australia. At these forums, interested farmers, community activists, food-lovers, students, workers and others will get together to talk about the changes we want to see in our food system. Contact .]