Scott Morrison has asked the Australian Competition and Consumer Commission to investigate the national dairy industry as the agriculture minister, Barnaby Joyce, emerged from a dairy crisis meeting declaring the days of $1-a-litre milk had to end.

The industry study comes as the ACCC completes a more specific investigation into Murray Goulburn and Fonterra after the milk processors slashed farm gate prices and applied the cut retrospectively. That investigation is looking at whether conduct was misleading or unconscionable.



The chairman of the ACCC, Rod Sims, said the market study announced on Thursday could have three outcomes: it could find breaches of the act; make recommendations for government; or simply show what was working well and what was working badly in the dairy industry.

“A market study looks at whether the market is functioning well,” he said. “It could uncover breaches or it may find there was no breach of the act but at the same time find it’s not working well.”

The ACCC announcement came after Joyce called dairy farmers, processors and supermarket giants Coles and Woolworths together to address the issues raised by the dairy crisis.

Joyce said the discussions focused on two points: government assistance through existing farm household allowance, and concessional loans and systems which would create more transparency in pricing and contracts between processors and farmers.

“Our dairy farmers deserve fair returns at the farm gate, as well as transparency in milk price arrangements and supply contracts, which is why I can announce the ACCC will undertake a detailed inquiry into our national dairy industry,” Joyce said.

“An in-depth and independent inquiry is a thorough and fair way to uncover inefficiencies and inequities that our farmers face – and identify a way forward.”



The inquiry will begin in November and report in the second half of 2017. It will look at risk sharing 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.



Joyce’s harshest comments outside the meeting were aimed at Coles and Woolworths over $1-a-litre milk as he warned the supermarkets to “solve the problem yourself” or face government intervention.

He reserved the right to intervene if the issue was not solved.

“You can solve the issue yourself but if you choose not to, don’t complain about the clumsy fingers of government coming in to deal with it, and I do absolutely reserve that right,” Joyce said.

He said New Zealand produced 19bn litres of milk a year – more than Australia’s 9.7bn litres – yet New Zealand milk was more expensive.

“The days of a $1-a-litre milk have got to finish because it just sends all the wrong messages,” Joyce said.

“Even the consumers are turning off it because they just say all I’m doing when I am doing that is buying a form of exploitation.

“I don’t want to be a part of it. I am happy to pay an extra 50, 60 cents, whatever it is. I don’t need some farmer working for $5 an hour for me to put milk on my Weeties.”

Labor’s Joel Fitzgibbon called on Joyce to “muscle-up” to Murray Goulburn on behalf of struggling farmers as the co-op celebrated its increased profit worth $40m rather than trying to distract with $1-a-litre milk.

“Everyone hates $1 milk including me, and Barnaby Joyce knows it’s a perfect distraction from his failure to do anything about the Murray Goulburn crisis,” Fitzgibbon said.

“If Joyce believes the commonwealth has the power [to change $1 milk prices] and should use that power, he had all of the last parliament to do so.

“The focus has to be on Murray Goulburn and Fonterra suppliers and Barnaby Joyce inexplicably refuses to muscle up in calling for MG to give farmers a better deal.”

Nick Xenophon, who has called for a “modest” temporary levy on milk to go directly back to farmers, said Joyce’s delayed reaction on $1 milk had a Rip Van Winkle feel to it.

“Where was the government five years ago?” Xenophon asked. “This delayed reaction to the milk price war is something that has Rip Van Winkle feel to it.”

He said while he welcomed a forensic examination of the industry, the report in the second half of next year would be too late for some farmers.