SYDNEY, Nov 8 (Reuters) - Australia's competition watchdog said on Tuesday it has begun a broad investigation into the dairy industry in the world's fourth-largest exporter, after major processors angered farmers with a deep cut to the price they pay for milk.
Australia's largest dairy processor, Murray Goulburn MGC.AX , and New Zealand's Fonterra Co-operative Group FCG.NZ in April slashed their farmgate prices by nearly 20 percent to a level below the break-even costs for many farmers.
The Australia Competition and Consumer Commission (ACCC) said it would focus its investigation on competition between milk processors, contracts between processors and farmers, global supply markets and the profitability of dairy farms.
Australia has made boosting agricultural exports a key goal amid a mining sector slowdown, a so-called "mining to dining" transition, but dairy farmers said price fluctuations means they cannot consistently boost supply.
Farmers said they expect the ACCC to recommend measures to remove inherent price volatility.
"Australia must look and examine what the next five, 10 and 30 years of dairy looks like and put a spotlight on the issues that are holding us back," said Adam Jenkins, a dairy farmer in Victoria.
A final report will be delivered to the government by Nov. 1, 2017.