The big national chain wants more milk from northern Victoria and the southern Riverina to make its cheese products at Saputo's Cobram and Allansford factories and is offering prices at the top of the market to secure the supply, on the eve of the date when processors have to declare their prices.
Coles will pay a full season price of about $7.19/kg milk solids, which according to analysts, Fresh Agenda, puts them ahead of most other processors.
Fonterra has announced a forecast average weighted price for the season of $6.55/kg but at the time of going to print Bega and Saputo had yet to announce their opening price.
Burra Foods has forecast a range between $6.40 and $6.80/kg for the year, while Bulla has announced $6.50 to $7.
Under the new dairy code of conduct the suppliers will have to show their hand by 2 pm on Tuesday, June 1.
Coles doesn't own or operate milk processing factories but outsources the supply to established milk processors.
The company already has about 60 suppliers and is seeking up to 100.
Coles launched its direct sourcing model in Victoria and Southern and Central New South Wales in 2019, contracting directly with local farmers to supply milk for Coles Brand fresh white milk in those markets.
Coles Brand Australian cheese is currently sourced from dairy processors who purchase milk from farmers, under contracts that allow the processor rather than Coles to set the farmgate price.
Coles general manager for dairy, Charlotte Rhodes, said the success of direct sourcing for Coles Brand milk and positive feedback from dairy farmers had prompted the expansion of the model to Coles Brand Australian cheese.
“Every time we have been to market looking to buy milk directly from farmers the response has been very positive, and we really value the relationships we have been able to build with our dairy farmer suppliers,” she said.
In addition to creating a dedicated milk pool, Coles has established the Coles Sustainable Dairy Development Group, through which Coles invests directly in on-farm sustainability projects in consultation with dairy farmers.
Farmers supplying Coles receive extension support from Coles’ Milk Management Service Provider Milk Department whose team has dairy expertise.
In addition farmers supplying Coles join the Coles Sustainability Dairy Development Group, which works with farmers on sustainability and development initiatives.Coles already has direct relationships with thousands of Australian farmers across the beef and livestock industry.
Coles has been providing farmers with on-farm mastitis testing technology, a farm defibrillator, market reports and information on hay and grain market updates.
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