August 15, 2018

Australia pig producers threatened with cartel charges if collective culling happens
 

Pig producers in Australia would be slapped with cartel charges if they attempt to cull piglets collectively to cut pork supply, the Australian Competition and Consumer Commission (ACCC) warned.

ACCC's threat came as Australia's pork sector grappled with a supply glut and low prices, according to a ABC Rural report. The action is communicated in an ACCC letter which was distributed by Australian Pork Limited (APL) to its members in the country.

"The ACCC has recently become aware of information suggesting some pig farmers might be considering plans to euthanise piglets in response to an oversupply of pigs in the market," the letter read.

"If farmers agree to act together to reduce the number of pigs in the market, they may be involved in illegal cartel conduct." As a result, producers could also face criminal charges.

"Cartels like this are illegal as they have the effect of reducing the availability of particular goods, which then artificially increases demand and prices," the letter stated.

ACCC commissioner Mick Keogh cautioned that unlawful cartel actions could amount to collusion. "Acting together would be considered to constitute a group of farmers or the industry representatives all sitting around in a meeting and discussing a proposal to reduce the supply of pig meat coming into the market, for example, culling piglets," he said.

However, the chair of APL, David Lock, noted that culling was already happening in Australia. He commented that pig farmers are left with little choice if "the market still delivers them a loss."

According to Lock, while  supply had overtaken demand, there was apparently no reduction in pork production for the past 18 months. Over the country, the number of pigs rose 6% more.

"One of the drivers that may accelerate a reduction in supply is an increased cost, driven by increased grain prices," Lock said.

Under competition laws, Australia's swine industry could apply for authorisation to collective culling. Still, affected parties must make the case that the benefits outweigh the potential reduction in competition through a rather lengthy process.

- ABC Rural