Peter Smith

Animal wellbeing and economics

Coles, competition, and disingenuous science

Coles has come under pressure recently for being too competitive. It has lowered milk prices. What next: bread, baked beans, frozen peas? Where will it end? Soon we will be paying lower prices for everything. Graeme Samuel has been asked to intervene to counter this conspiracy against dairy farmers and smaller grocery businesses. Unsurprisingly, he has struggled so far to see how intervening to increase milk prices, and why stop there, other prices too, at the major supermarkets, will make him popular. "We want to be sure that the consumer gets the benefits of real aggressive competition”. Quite right too, Mr Samuel.

Competition is uncomfortable for those who just wish things would just stay the same. All of a sudden some nasty people start doing things better, cheaper, quicker, and, in this case, more ethically. They must be stopped because established businesses are entitled to go on doing things in the same old way and selling products at inflated prices. Bugger the consumer.

Coles haven’t just upset dairy farmers of course; they have upset other farming interests and at least thirty five scientists. That is not a bad trick. How did they do it? Coles, no doubt for business reasons, but putting cynicism aside, maybe also in the interests of the health of their customers and for ethical reasons, no longer sell beef from cattle infused with growth hormone and intend to phase out pork produced using gestation crates. This must be inconvenient for those farming interests that use growth hormone and incarcerate sows in metal crates measuring 2 foot by 7 foot, allowing them no room to move, for most of their lives.

Thirty five scientists took out a full page newspaper advertisement objecting to Coles’ policy. They say, apart from threatening the world’s food supply, that Coles is giving a false impression that hormone-infused beef (banned in the EU) is unhealthy and that incarcerating sows is unethical. To give us confidence that their views are well-based, they tell us that “farmers and their scientific advisers are the experts in agricultural production”. Phew! I thought of mad cow disease produced by feeding herbivorous cows fish pellets and was worried there for a minute; before reading this assurance. To boot, and why not, the scientists claim that Coles’ policy will produce more greenhouse gas emissions. No scientific piece of barely literate propaganda (and that is the way this reads) is complete these days without climate change.

Wherever these scientists are coming from and whoever they are; personally, I have no respect at all for anyone hiding behind the title of being an expert, who defends the barbaric commercial treatment of animals. They don’t deserve a hearing. Because of their cruelty, gestation crates are banned in the UK and Sweden; they are being phased out in the EU and in New Zealand and have either been banned or are being phased out in numbers of US states. Even McDonald’s has been reported as expressing concern about the practice, yet these scientists defend it. But I don’t want to get into this; there is plenty of information available on indefensible barbaric factory farming practices and the commercial interests willing to defend them for a buck. I will stick to the economics.

The economics are simple. Coles is a retail business. Unless some particularly egregious unlawful behaviour can be demonstrated, for example price collusion, it should have the sole right to decide what it sells and at what price. It will live or die as a business making these decisions. If suppliers of milk or hormone-infused beef or of cruelly-produced pork are inconvenienced and suffer losses; too bad. That is the way business works. Everything else is cosy arrangements conspiring against the public interest. Businesses can protect themselves through contractual arrangements. Otherwise they face the disciplines and uncertainties of the marketplace and need to respond commercially as circumstances change. That is the process that has made Western societies prosperous.

Essentially certain farming businesses seem to be trying to protect their commercial interests, not by responding commercially, but by using the cover of disingenuous (and puerile) science. I doubt this will have any effect on Coles’ business. People are quite capable of deciding whether they prefer cheaper home brand milk or are willing to pay a little more for unadulterated beef (if that is the case) or, hopefully, pay a little more for pork produced in a more civilised fashion. This will play out, as it should, in the marketplace. Coles will become more or less profitable as a result of the transparent commercial decisions it is making.

(The author is Wesfarmers’ shareholder of modest proportions.)

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