NATIONAL Foods executives have been branded "liars" at a Senate Inquiry in Canberra today.
Senators accused the company of lying to customers about a need to increase milk prices, despite its farmer suppliers struggling to survive with contract milk prices below the cost of production.
A Senate Select committee on agriculture and related industries is investigating milk pricing in the context of food production, while a separate economics committee will soon begin examining milk pricing and competition - both with particular attention being given to the varying prices being paid to dairy farmers.
A fiery parliamentary hearing in Canberra today heard National Foods wrote to some wholesale customers in June this year advising them of "necessary" price increases because of unprecedented increases in farm-gate milk prices, particularly in NSW.
But evidence to the inquiry, which commenced in Devonport, Tasmania, yesterday, heard farmers were struggling to make ends meet because contract prices were below the cost of production and were being "foisted" upon farmers without consideration for rising farm inputs.
It was alleged in Canberra's hearing that National Foods was paying farmers progressively less across its markets.
Tasmanian Liberal Senator, Richard Colbeck, said National Foods was telling farmers they needed to be paid less because the global market for milk had moved downwards, meanwhile at the other end of the market the company was "whacking the price up".
Senator Colbeck said farmers were being "screwed", while his NSW Liberal colleague, Bill Heffernan, told the company they were "lying" to supplying farmers and to their customers at the wholesale end.
National Foods, which is projecting to double its profits this year, argued the company has to pay a market competitive price and actually paid a three cents a litre premium over and above its competitors across south eastern Australia.
Outgoing managing director and chief executive officer, Ashley Waugh, said National Foods does not have a monopoly on milk purchasing in the contentious battleground of Tasmania.
He argued the price in the supermarket today was very much in line with current farmgate prices.
In its submission to the inquiry, National Foods said the global financial crisis had an "immediate impact on the global trade in dairy commodities".
"As insurance and credit markets froze, bank insolvency fears grew and currency fluctuations became more volatile, dairy prices went into free fall," their submission said.
"This led to a sharp reduction in the price being paid internationally and in Australia for farm gate milk…"
Farmers at a rally in Devonport expressed outrage that National Foods did not attend the Tasmanian hearing and face local farmers.
Western Australian Labor Senator, Glenn Sterle, said National Foods should have been in Tasmania to hear the stories of farmers at the first inquiry, but quipped "you might have been hung from the nearest tree at the rally".
*Click here to view photos from the dairy farmer protest in Tasmania.
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