No leeway on $1/L milk

31 Dec, 2012 01:00 AM
Comments
13
 

ONE dollar a litre milk is here to stay. This was the overall message of a meeting between WAFarmers and Coles in late December.

Primary Consulting Services Pty Ltd consultant Colin Bosustow attended the meeting on behalf of WAFarmers.

He met with Coles to outline the findings from the milk price sustainability report.

Mr Bosustow said the meeting was successful in that Coles accepted the findings of the report and understood dairy farmers needed an increase in farmgate price to remain in the industry.

"They were supportive of the idea of a milk price rise to the processors, providing those processors could justify their request," he said.

Mr Bosustow said to a Coles representative that the industry saw the $1/L campaign as an indication of an undervalued product.

He said that perception had flowed into a reduction in investment and interest in dairy farms, which was a huge negative for the long-term sustainability for the industry.

"Coles would not discuss the concept of their $1/L milk campaign and they would continue to use that strategy," Mr Bosustow said.

"Instead they wanted to look at a price increase across the whole dairy range.

"But if they increase the price of branded milk, and keep the home brand milk at $1/L, the price difference between the two would be even greater."

He said although parts of the meeting were successful they failed to gain any productive dialogue with Coles on the $1/L milk.

"We weren't really surprised," Mr Bosustow said.

"But it would have been beneficial if we could have discussed it and if they showed some empathy towards the impact it was having on the industry.

"They see it as their right to determine their own marketing strategy."

Mr Bosustow said the next step would be to meet with Woolworths and IGA to discuss the issue.

WAFarmers dairy section president Phil Depiazzi said it was disappointing Coles was adamant about keeping milk at $1/L.

"At the end of the day the cheap milk campaigns have been a real problem for our industry," he said.

"It is hurting processors and it is hurting producers."

Mr Depiazzi said the campaign had been a windfall for supermarkets to attract people into their stores, but he believed it was no longer cheap milk that was drawing the crowds.

"I think the novelty has worn off a bit, but still they decide to keep that price," he said.

"And yet both Coles and Woolworths are prepared to come out and say they are supporting their farmers.

"But it is a paradox because they can't say that and keep milk at a $1/L, it just doesn't work."

According to Mr Depiazzi the supermarkets were prepared to work with farmers to try to achieve a greater return, but he admitted he didn't know how they were going to do that without raising the price.

"I don't want to be negative, but we need a price that is going to sustain the industry so we can be a real and positive contributor to the State's wealth," he said.

A Coles spokesman said the Milk Price Sustainability report was a good report that focused on returns to dairy farmers, and noted that these are influenced by many factors, including the farmgate price.

"The important issue for processors and dairy farmers is not the retail milk price, but the price being paid to processors, as this is what flows through to dairy farmers," he said.

"The retail price of milk is in fact disconnected totally from the farmgate price.

"Coles pays a commercial price to dairy processors, we do not deal directly with dairy farmers.

"We pay our dairy processor more than the break-even point outlined in the Milk Price Sustainability report.

"We also inserted rise and fall clauses in our contracts so that if farmgate prices rise, we pay our dairy processors more.

"This protects the dairy farmer as much as we can.

"Dairy farmer's margins are influenced by many factors including input costs which are totally out of the control of Coles."

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READER COMMENTS

pedro
31/12/2012 8:12:07 PM, on Farm Weekly

maybe if dairy farmers became militant and said no milk for a fortnight they may be taken seriously by the supermarkets.at the moment they see producers as peasants and treat them as such.
Jen from the bush
31/12/2012 8:52:50 PM, on Queensland Country Life

Suggest you have an advertising program advising people of the connection between Johnes and Crohns and advertise own milk as Johnes free and charge more for the safe milk. Watch Coles $1/lt sales go down as people chose to drink the Johnes free milk. The question must be asked why are 80% of Crohns sufferers carrying the same bateria? Just give us guaranteed Johnes free milk. I for one would pay the price difference.
The Lowgun
1/01/2013 4:44:20 AM, on The Land

Coles like when they have all choices and the farmers have none. The solution for NSW, Qld and WA is for the diary industries to create choices for their milk and not have to rely on Coles. They can no longer rely on the processors to do that for them. They must do it as a whole supply chain.
Ian Mott
1/01/2013 9:13:45 AM, on The Land

Has the Coles Executive team been on the same salary for the past decade? Fat chance. Dairy farmers need to understand that the concept of negotiation extends a lot further than just having a little friendly chat. Start spraying coles check-outs with the foulest sour milk you can produce and their customers will soon understand that their management is on the nose. So lets spell this out. Coles have linked the value of their brand (their key asset) with the persecution of their suppliers. So you MUST attack their brand.
Ian Mott
1/01/2013 9:20:47 AM, on The Land

After ten years at 2.5% inflation, that $1/litre milk should now be $1.28/litre. But if that 2.5% inflation rate has only been possible because the price of milk remained unchanged. Put that increase back into the CPI and it would have been 3% PA. And the current fair price should be $1.34/litre. So how much longer do these goons plan to shaft the farmers?
xcb
1/01/2013 9:52:33 AM, on The Land

People need to get better connected with their food and make the effort to shop for local produce e.g. at farmers markets or better still go and visit a nearby farm. Its crazy that we as consumers look for the cheapest source of food for our bodies where in comparison, we try to put the best fuel in our cars as we know it makes them run better.
Jock Munro
1/01/2013 1:48:24 PM, on The Land

Rob Hadler is Coles corporate affairs manager. Mr Hadler was formerly employed by the Chair of AWB Ltd Brendan Stewart and the CEO Gordon Davies to remove grower control from AWB and to undermine the single desk, in a move designed to strenghen their campaign to disenfranchise producers. The success of this campaign is proof of the damage that a corporate campaign can inflict on the gullible and innocent. With Rob Hadler in control of the message, it will be business as usual at Coles and growers will continue to suffer a decline in their incomes.
Bushie Bill
4/01/2013 7:42:11 AM, on The Land

Doesn't the Mutt always raise the level of civilised intellectual debate with his posts? We should all be grateful for his contribution of highly considered, well-reasoned, intellectually evaluated, innovative and informed posts. He really is a treasure and enriches our lives, doesn't he?
Ian Mott
4/01/2013 7:51:31 AM, on The Land

Some might say, finally, a true word from BS Bill said in jest. I think it was the late Steve Biko who said, "show me what you can do with your other cheek, and I'll show you what I can do with half a brick". History proved him dead right.
Bushie Bill
6/01/2013 12:31:34 PM, on The Land

Did he say that, Mutt? Where and when? Or is it simply another example of your inability to distinguish between fact and fiction, living in a make-believe world, as you do?
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