The Senate Economic References Committee has this week released its findings on the supermarket milk discounting war. The main findings, blessedly, were that cheaper milk really is good for consumer,s and that there was nothing obviously awry with the competitive market that gets milk to them:
Dairy farmers do not appear worse off from the growth in private label milk that has occurred over time. While there may be some short-term uncertainty due to changes in private label milk contractual arrangements between the major supermarkets and the processors, this appears to be a separate issue. The ACCC’s 2008 report concluded that the lower price of private label milk over time has appeared to shift margin away from processors (with benefits for both the major supermarkets and consumers), while not resulting in a reduced farm gate price.
It’s amazing that farmers’ complaints on this issue were ever taken seriously. Indeed, the obvious takeaway from the report is that people in the farming business are all too ready to point to economic and regulatory issues that don’t actually exist.
Were farm groups embarrassed by any of this? Not a bit. They reacted as they so frequently do, posing at the same time as rugged individualists and pitiable victims of capitalist forces beyond their control.
Given the evidence, we would do better to employ a lot more scepticism when farm groups make statements on economic issues. They played a decent role early in the campaign to remove tariff barriers, but since then have been a source of much lousy policy for a quarter of a century.
Supporters of decent policy for the Murray Darling Basin will be able to cite plenty of examples where farm group have taken unjustified control of policy. But as a public policy disaster, probably nothing in Australia will ever top the farmers’ self-regulated wool price scheme, which so many woolgrowers believed in long after it became perhaps the worst financial disaster ever to hit the country.
If any other group in Australian society had perpetrated such a fiasco, people would still be making jokes about it. Yet I haven’t hear anyone so much as mention the wool price disaster since about 1995.
No-one hesitates to criticise unions or big business for lousy policy ideas – of which, it must be said, they have plenty. But farmers, despite a long history of backing dumb ideas, seem somehow off-limits.
Tell me what I’m missing here.