COLES is expected to announce it will be back buying WA beef and lamb by the end of the month.
The contract was previously significant to local meat producers, with the supermarket buying anywhere between 500-800/head each week in WA.
But in recent years the chain has been stocking its shelves only with eastern states’ beef, as exclusively revealed in Farm Weekly reports.
While the announcement will be positive news for an ailing red meat industry, producers still have concerns that a scramble to win the Coles contract could spark a bidding war between WA’s major processors, causing contract prices to suffer.
Farm Weekly also understands Coles only wants to deal directly with processors, and not produ-cers, unlike its main competitor Woolworths which buys direct from producers.
Reports have already surfaced that processors are prepared to offer as low as $3.40/kg to try and win the contract.
Coles’ move back into WA follows more than eight months of negotiations with the state’s processors and producers.
Representatives from the com-pany’s supply and procurement departments first visited WA eight months ago to inspect pro-cessing plants and invite expressions of interest from WA processors who wished to supply beef and lamb to the supermarket giant.
Positive negotiations also took place last Thursday between Coles supply department mana-gers and the Red Meat Action Group (RMAG), a lobby group formed following the Red Meat Crisis Meeting in November.
RMAG chairman Gary Buller said the addition of another pla-yer in the market could only be good for the industry, but if Coles was going to try and buy WA meat cheaply they would want to think again.
“If WA producers don’t start getting paid more for their pro-duce, there will not be any farmers left,” Mr Buller said.
Mr Buller said it was a con-cern that Coles did not want to deal with producers, just proces-sors.
“They have also indicated that they may deal with more than one processor and maybe up to three to source their beef,” he said.
“We have made it clear to Coles that they will not be than-ked by the producers or the con-sumer in this state if they start offering processors prices below the producers’ cost of production.
“If they do, the continuity of supply will not be there, people will get out of the industry and there will be no choice but to import beef because there will be none here.”