Milk wars: Farmers angered by Woolies ad

27 May, 2015 10:22 AM
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Woolworths slashed the cost of its private label milk to $2 for two litres and $3 for three litres more than four years ago.
Everyone else in the community gets an upside
Woolworths slashed the cost of its private label milk to $2 for two litres and $3 for three litres more than four years ago.

BRISBANE Lions and Gold Coast Suns aren't the only Queenslanders that are struggling – just take a look at the State's dairy farmers.

It's a fair comparison. Supermarket giant Woolworths has signed a deal with the AFL to market its private label milk as the league's official basic dairy beverage.

It is the same product that Woolworths slashed to $2 for two litres and $3 for three litres more than four years ago.

The discount, known as the milk wars, came after rival Coles cut the price of its private label milk to $1 a litre on Australia Day 2011, sparking criticism from dairy farmers across the nation who said the pricing was unsustainable and would squeeze the margins of dairy processors.

But Woolworths' AFL sponsorship aims to change that – at least if you take a look at the accompanying advertisement, which features the line "proud supporters of Australian farmers".

Dairy farmers in Queensland, however, are puzzled at how Woolworths is fulfilling its claim.

A spokesman for the state's peak dairy body, Queensland Dairyfarmers Organisation (QDO), said since the milk wars began - coinciding with severe floods -130 farmers have quit the State's dairy industry, leaving a total of 455.

"This has meant a huge loss of fresh milk for Queensland and our State is now short of producing fresh milk for itself across the year," the QDO spokesman said.

While national milk production is up 2.9 per cent in the 12 months to April, Queensland's production has plummeted 5.9 per cent in the same period, according to Dairy Australia.

"Queensland Dairyfarmers' Organisation always encourages consumers to think twice about putting $1 milk in their supermarket trolley," the QDO spokesman said.

"Branded milk has a real and positive impact for farmers and will maintain consumer choice and product innovation into the future."

Price freeze a concern

Woolworths says it doesn't set the price dairy processors pay farmers for their milk.

Australian Dairy Farmers president Noel Campbell said while international prices mainly determined farmgate prices in Victoria and Tasmania - which export about half of their production - the fact that the supermarkets hadn't changed the price of fresh milk in four years was a concern.

"We are still concerned that it's still $1 a litre because if you have an inflation rate of 2 or 3 per cent, it's now equivalent to about 87 cents a litre," Mr Campbell said.

"That's an absolute no, no as far as we are concerned because there's no upside. Everyone else in the community gets an upside."

Mr Campbell said Australian Dairy Farmers was also concerned the discount would hinder product innovation from processors.

"There is not likely to be much innovation, given they have squeezed margins for processors. If they want to look at extended shelf life or some other innovation they aren't likely to do it because there isn't the money to do it".

In February 2014, Woolworths launched its Farmers Own brand, which bypasses milk processors with the supermarket chain buying the product directly from farmers.

Mr Campbell said while Woolworths' was correct in saying it was helping farmers through this initiative, it was a limited market.

"In NSW, I think there are seven farmers involved, in Queensland I think there are two farms involved, so as far as any upward pressure in pricing, it's not really happening because of the number of farmers involved," he said.

"Yes, they are right in saying they're helping out a dairy farmer, but not it's not (helping) the mainstream industry."

Woolworths has been contacted for comment.

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READER COMMENTS

genazzano
28/05/2015 8:32:10 AM

Woolies & Coles screw farmers - so consumers should screw them and not buy their milk
BJ
29/05/2015 6:06:18 AM

Sad reality is that the average consumer doesn't have the the farmer in mind when they purchase their milk, budget restraints are usually on the top of the list, that's why the $1 liter milk has been so successful.
MR
29/05/2015 1:10:00 PM

I'm amazed anyone bothers to remain a member of the QDO. They have been banging on about this for several years, the problem remains the same and they have not offered any solutions that they can control? They just want govt help. Farmers can't control a retailer's margin or the sell price, neither does govt, so why focus on it? The problem here is not the retailer, it is the wholesale price of milk and old fashioned thinking can't create a solution!
XD
29/05/2015 3:24:48 PM

I went into a shop and asked for a litre of milk. The assistant said 5 dollars please. I said I had been next door and they just charged 1 dollar but they had none. The assistant said they also charged 1 dollar when they had none as well.
newbroom
29/05/2015 4:24:44 PM

I know for a fact that Woolies did a deal with farmers in the Manning Valley to promote their milk. Get a grip before moaning and complaining. Geez Australian's are whingers!
JayDin
1/06/2015 11:44:01 AM

As easy as it is for farmers to whinge, the ones I know will similarly buy the "cheapest" or "most suitable" product when sourcing their requirements (ie. parts, wheels, fert, whatever) with little care as to if sourced and producted in Australia or elsewhere. Just saying ...

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