THE Queensland Dairyfarmers’ Organisation (QDO) has hit out at the decision by supermarket giant Coles to cut the price of its ‘supermarket brand’ milk, warning that the move will place significant financial strain and pressure on already stressed farming families.
Earlier today, Coles announced that it would be taking advantage of the earnings downturn faced by rival Woolworths to launch a heavily discounted milk offer to tempt shoppers into its supermarkets.
QDO President Brian Tessmann said dairy farmers across the country woke this morning to the unpleasant news, and said that milk prices are under unsustainable downward pressure from the retailers.
Coles will terminate its Smart Buy milk brand and reduce the price of its house brand milk to become its new flagship offering.
The price of a Coles brand two-litre carton of lite milk will come down to $2, a 33 per cent discount in New South Wales, Victoria and Queensland. Coles full-cream milk will also be cut down to $2.
“We are now facing the bleak prospect of retail milk prices reaching a point that is unsustainable for the milk value chain. This will flow back through the processing sector and ultimately to farmers,” said Mr Tessmann.
“It is kicking family farmers when they are down. This is happening at a time when the industry is battling the devastation of the massive Queensland floods.
“These floods are taking a heavy financial and emotional toll on farmers, and for Coles to give farmers this announcement on Australia Day is cruel and insensitive. We want our farmers to have confidence in the future and to be rebuilding their businesses after the flood,” said Mr Tessman.
The QDO said that what is ultimately a publicity ploy from Coles will mean farmers will ultimately be paying for the advertising bill.
Mr Tessman said that Coles’ assertion that the price drop would not affect milk processors and dairy farmers was simply wrong.
“We know from a recent Senate Inquiry that the growing trend toward supermarket brand milk is putting a squeeze on the value chain and ultimately the farmer. This price drop will increase the price difference between large retailer ‘supermarket brand’ milk and milk processor branded milk. So of course shoppers will opt for supermarket brand milk and, with that, lower returns go to processors and that will flow on to the farm gate.
“We know that already the price differential between supermarket-brand and branded milk sucks about $90 million from the value chain in Queensland alone every year,” said Mr Tessman.
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