The inquiry was announced last week by Deputy Prime Minister and Minister for Agriculture and Water Resources Barnaby Joyce at a dairy symposium in Melbourne. 

Minister Joyce said Treasurer Scott Morrison will request the ACCC undertake an inquiry under Part VIIA of the Competition and Consumer Act 2010 providing the commission with powers to obtain information from companies.

The ACCC inquiry, to begin in November, will investigate sharing of 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.

The spotlight was placed on the dairy industry earlier this year when Australian milk co-operative Murray Goulburn announced an unexpected dramatic cut to both its southern and northern milk suppliers. 

In May, Murray Goulburn slashed prices dramatically for its Victorian and Tasmanian southern region milk pool to a catastrophic low of 33c a litre ($4.31/kg milk solids). 

In June prices for the northern region milk pool, which operates on a different pricing structure than the southern pool, received a cut of up to six to seven cents per litre, with a new price of 46.7 cents per litre. This cut effects around 50 Manning Valley Murray Goulburn suppliers, with many now operating under or close to the cost of production. 

Following the dairy symposium, Murray Goulburn chairman Phillip Tracey sent an email to suppliers. 

“MG will co-operate with the ACCC’s investigation,” wrote Mr Tracey.

 “We have committed to co-operate with all dairy industry bodies and processors in the period ahead. Our collective aim is to reduce the risk of the current situation occurring in the future.” 

The ACCC is set to deliver a final report to government in the second half of 2017.