Supermarkets urged to step-up on pricing
Dairy groups have welcomed moves by Coles to lift own-brand milk prices, saying low farm gate prices had forced farmers from the industry, which was affecting supply.
On July 13, Coles announced the retail price of its one-litre own-brand fresh and UHT white milk would both increase by 25¢ to $1.60, its two-litre fresh white milk would increase from $2.60 to $3.10 and three-litre fresh white milk from $3.90 to $4.50.
Coles said it had updated contracts with 100 Australian dairy farms to supply milk directly for the Coles brand.
“In recognition of the higher costs being faced by dairy farmers, this included an increase to the farm gate price paid by Coles this financial year, even for farmers with multi-year contracts already in place,” the company said.
“Coles has been paying these higher prices since July 1.
“In recent months Coles has also agreed to significant increases to wholesale prices in markets where Coles Brand milk is sourced from processors, as the farm gate price they pay to dairy farmers has also risen substantially.”
UDV vice-president Mark Billing said the move would help put value back into the supply chain and was a culmination of a number of factors.
“We’ve got fertiliser costs that have gone through the roof and significant costs around energy and grain that farmers need to feed to our cows,” Mr Billing said.
“Farmers can’t continue to fully absorb these costs and that’s part of the reason we’re now seeing retail level prices start to increase.
“Many dairy producers are just breaking even in terms of mounting costs. To have milk, we need dairy farmers, and this move helps ensure that.
“The retail price of milk has remained stagnant for many years now, so from a farming point of view this change has been a long time coming.”
NSW Farmers Dairy Committee chair Colin Thompson said the higher prices being paid to milk processors were a direct result of constricted supply, and warned the situation would only get worse unless farm gate prices improved in real terms.
“These prices rises announced by Coles are a result of dwindling supply driving the market up, and the best way to address that problem is ensuring ample supply by paying farmers a fair price,” Mr Thompson said.
“Farmers need to at least break even in their businesses, and the fact that we’ve lost 29 farms in the last 12 months is a pretty good sign that’s not easy.”
Seasonal conditions across NSW have resulted in reports of 30 to 40 per cent drops in milk yields, while natural disasters and skyrocketing input costs have further squeezed profit margins for farmers.
“We are calling for the major supermarkets and processors to work with farmers to ensure they get a fair price for their milk, which will mean dairy farming becomes a viable business again,” Mr Thompson said.
“The alternative is skyrocketing dairy prices in the supermarkets, and potentially the end of Australian milk production.”