Australia’s peak farming body has accused chicken processors of “serious and deplorable” behaviour toward producers and called for a mandatory code of conduct, in a lengthy report on ways to increase market transparency and improve competition in the sector.
The National Farmers Federation report, released on Tuesday, said there was “significant market concentration” in the sector and identified a widespread misuse of market power by major chicken processors at the expense of producers.
Processors Inghams Enterprises and Baiada Poultry supply about 70% of Australia’s poultry meat. The remainder is owned by four other enterprises.
The NFF was funded to undertake the report by the federal agriculture department and specifically address whether a code of conduct should be introduced.
The NFF chief executive, Tony Mahar, said current legislation is insufficient to address systemic power imbalances between producers and processors, and the report concluded that a mandatory code of conduct was the most effective tool to correct issues in the supply chain.
“We’ve seen several other agricultural industries go down a similar path and be revived by this type of intervention, the dairy industry is the perfect example,” he said.
“We look forward to receiving the government’s response to the report’s deeply concerning findings and strong recommendation.”
If adopted by the federal government, a mandatory code would return “confidence and fair trading in the supply chain,” Mahar said.
The report was commissioned after a 2020 Australian Competition and Consumer Commission inquiry raised concerns about how processor concentration was affecting the industry.
The poultry meat manager at the New South Wales Farmers Association, David Banham, interviewed more than 150 farmers as part of the NFF report.
“There is little to no choice in processors, growing contract terms are unfair, and there is a deliberate undermining of collective bargaining efforts within the supply chain,” he said.
The report found processors have favoured individual producer contracts to weaken state-based grower groups efforts to collectively negotiate prices.
Producers also reported a “genuine fear” of challenging unfair contracts, out of concern for commercial retribution. In situations where farmers had access to more than one poultry processor, they had almost no ability to compare price offerings.
Australians eat an average of 50kg of chicken a year, representing 45% of all meat consumed domestically.
But Banham said growers get the “end of a raw deal,” pocketing less than 6% of the retail price for a roast chicken.
The Australian Chicken Growers’ Council supports the call for a mandatory code. Acting chief executive, Joanne Sillince, said market conditions for poultry farmers have been in decline for decades.
“Imagine playing in the under 10s rugby team and having the A-grade men’s team coming at you with no rules, that’s what it’s like for farmers,” she said.
“If there’s a set of rules a referee can blow their whistle and call a time out … that doesn’t mean we’ll get a free kick, it doesn’t eliminate competition.”
The Australian Poultry Meat Association, the body that represents processors, declined to comment to Guardian Australia. In an earlier statement to the ABC, the association said it does not support a mandatory code of conduct. It said no leg of the supply chain controls the production and distribution of chicken meat at the loss of others.
The federal minister for agriculture, Murray Watt, said the NFF report would be “carefully considered by the government”.
“Farmers deserve a fair price for their hard work, which is why the Albanese government has initiated a number of inquiries aimed at improving transparency of pricing,” Watt said.
Sillince called on Watt to back the mandatory code. “How many farmers have to be lying in the street before Murray Watt’s office is going to commit to this?” she said.
Inghams Enterprises declined to comment. Baiada Poultry did not respond.
