HAVING extended direct milk sourcing into Western Australia earlier this year for its own brand products, Coles supermarkets is about to extend its Coles Sustainable Dairy Development Group (CSDDG) campaign.
It plans to meet with the 10 WA dairy farmers it now buys milk from for its Coles brand milks and creams to discuss "opportunities to invest in onfarm sustainability initiatives".
Since June last year, when Coles supermarkets first began sourcing milk direct from farmers in Victoria and southern and central New South Wales, the CSDDG has invested in animal health-care technology trials and helped improve workplace safety by providing supplies of hand sanitiser and installing defibrillators at dairy farms.
Coles now expects to buy 35 million litres of milk a year direct from its 10 WA dairy farmer suppliers.
Since October 1 its direct-purchased milk has been processed and packaged under a toll arrangement at Bentley by Lion Dairy & Drinks as Coles' own brand milks for its supermarkets.
Direct-purchased milk is also processed and packaged under a similar toll arrangement with Brownes Dairy at Balcatta for Coles brand milk products sold through Coles Express petrol and convenience sites.
Coles called for expressions of interest in supplying it directly in June and offered one, two and three-year milk supply agreement options, but a company spokesman said last week its 10 suppliers had all opted for three-year agreements.
Its published minimum seasonal milk price in WA is based on rates of $6 per kilogram for butterfat September-December and $7.40/kg for the rest of the year and $7.50/kg for protein September-December and $9.20/kg for the rest of the year.
Brunswick Junction farmer Don Fry is one of the 10 Coles suppliers.
"We were thrilled Coles was able to offer us a long-term contract - it gave our family, with sons on the farm, genuine confidence in our future," Mr Fry said.
"The communication has been a real standout and the growing direct relationship is really refreshing."
Coles dairy general manager Charlotte Rhodes said the new sourcing arrangement helped ensure security of supply for Coles customers while supporting long-term sustainability of suppliers' farms.
"By working directly with dairy farmers, we're able to offer a transparent price, as well as more choice regarding the length of the contract, providing improved certainty around income," Ms Rhodes said.
"In the last year we've built strong relationships with our directly-contracted dairy farmers in NSW, Victoria and South Australia.
"Extending our direct-sourcing model to Western Australia is an important step in investing in a sustainable dairy industry and addressing long-term structural problems.
"As part of our Sustainable Dairy Development Group, we'll be meeting directly with WA dairy farmers over the coming weeks to discuss measures aimed at improving the long-term sustainability of their farms."
Coles now deals directly with almost 60 dairy farmers across Australia who supply it with more than 5m litres of fresh milk each week.
But WAFarmers dairy section president Ian Noakes said while Coles' direct purchase agreements had been good for the 10 farmers supplying it, they did not benefit local dairy farmers generally.
"While they (Coles) might have offered the highest minimum milk price in WA on their contracts, it is only benefiting the 10 farmers," Mr Noakes said.
"Because they are dealing directly with those 10 they've stopped paying the 10 cents a litre voluntary levy that previously was shared with all Lion suppliers - they each got about 3.5c/lt out of it.
"Lion had about 30 suppliers that got something extra from the levy but now only 10 get more, so the benefit is with Coles - that's the way we view it."
