How do I know buying branded milk will mean better prices for farmers?

“I am concerned about the welfare of Dairy farmers and the ‘$2 dollar’ milk available at supermarkets. I just want to know which milk benefits the farmers the most and not overseas owned companies who are not passing on the money to farmers. I have been paying the extra buying Dairy Farmers, only to find out that they are owned by a Japanese company!…We are happy to pay extra if we know a fair proportion of the money is going to farmers.”

A fellow called Peter sent me this message in the wee hours and raised a really good point – one that was echoed by CC & Ruby’s question the other day, so I’ve decided to address this thorny issue head-on.

Almost all dairy farmers send our milk to large processing companies because Australia’s stringent dairy food safety laws make it very expensive and difficult to supply consumers directly.

Our farm supplies the Murray Goulburn Cooperative, which is owned purely by the farmers who supply it. If you buy Murray Goulburn’s Devondale dairy foods, you know 100% of the profits are being returned to dairy farmers. The wonderful thing about MG is that because it’s owned by farmers for farmers and processes around 35% of Australia’s milk, it tends to set a farmgate price benchmark for the other processors.

On the other hand, it doesn’t pick up milk from right around Australia, concentrating on the biggest milk-producing state of Victoria. If you’re a dairy farmer in northern NSW, for example, you don’t have the option of supplying the Co-op and are more likely to supply a privately-owned processor. These privately-owned processors sell dairy foods under their own brand names or package homebrand milk under contract to the supermarkets.

When Coles and Woolies embarked on their milk war, it hit the processors hard pretty much straight away because brand name milk sales fell.

The Coles spin doctors said it wouldn’t affect farmers because they deal with the processors, not the farmers. This defies common sense. If a multinational supermarket controlling a huge chunk of retail sales decides to cut its prices below a sustainable level (Coles denies this too but Woolies has gone on record saying $1 per litre is not sustainable), putting its multinational food processor supplier to in turn lower its own costs, how do you expect that processor to respond? By sourcing the raw milk more cheaply of course! And guess what? It buys from small family businesses (98% of Australian dairy farms are family owned and operated) who have the least bargaining power of all.

No, I can’t guarantee that if Peter buys Dairy Farmer branded milk rather than private label, farmers will be better off. On the other hand, it is guaranteed that if Peter buys unsustainably priced milk, someone else will have to pay. That will almost certainly be a farmer and her family in the short term. In the medium term, it will be her cows and the environment and, over the longer term, it will be milk drinkers because there’s no such thing as a free lunch.

21 Comments

Filed under Dairy Products, Milk quality

21 responses to “How do I know buying branded milk will mean better prices for farmers?

  1. Hi Marian
    Great post
    As Dairy Farmers supplier my milk is sold to my Milk Cooperative who supply the Japanese company. All profits made by my milk coop go back to their Australian dairy farmers who are now experiencing the brunt of the supermarket milk wars. What I say to consumers is “buying the Dairy Farmers brand is indeed an investment in our farmers and its also an investment in local communities and thats a great thing

    Like

    • Pete Day

      So doesn’t that mean that the profits are going to Japan? Are they putting pressure on your coop to cut the price? I had heard that this same company was squeezing dairy famers iin Tasmania. Thanks for info
      .

      Like

      • Hi Pete The profits go to Japan and flow back down the supply chain ( hopefully to the farmers) Lets not forget this is Aussie farmers supplying Aussie milk and that is what your Dairy Farmers milk purchase is an investment in

        Like

  2. Julie D

    Hi Marion,
    In Northern NSW people can still buy milk from smaller co-ops. There’s still the Hastings Co-op at Wauchope (although the mik processing arm was recently sold to Sungrow) and NORCO (processing done by Fonterra).
    Happy shopping everyone!

    Like

  3. Ian A

    My wife and I have three kids, all of whom are not just ‘lactose tolerant’ but close to ‘lactose addicted’, so we plough thru milk and cheese at a rate of knots!

    From my perspective – as someone who does the shopping, is based in the suburbs and spends less than 10 seconds at the milk section in the local Woolies supermarket – here are my thoughts (for what they are worth):

    – for me, milk is milk is milk. It’s off-white and the only thing that looks different is the packaging.
    – because it all looks the same, I normally buy on price. I used to buy the no-name milk but the stories in the press about unsustainable prices to farmers mean that I now buy branded milk (but still on price). Without information to the contrary, I assume that the lower priced milk is lower priced because the farmers selling that product are more efficient and should therefore be encouraged.
    – I dont know who are the ‘good guys and who are the ‘bad guys’ in the branded section. Is it only Dairy Farmers and Devondale? What about Pura or Pauls?
    Don’t they all use Australian milk? Dont they all support Australian farmers?

    I’m a pretty typical consumer and frankly, there needs to be a good reason why I should buy milk that is more expensive. If your cooperative or its marketing agency cant explain these reasons clearly to me then that is their problem, not mine.

    If you can explain to me in terms of quality or shelf-life or lack of additives or ethical production or financial viability for farmers, why your milk is worth the money then, hey, I might give it a go.

    (sorry if this sounds aggro – it’s not meant to be)

    Like

    • In response to Ian A’s comments, I am a UK dairy farmer and we experience exactly the same pressures from retailers and big processors over here. That’s why I recently set up Free Range Dairy – to try and explain to guys like Ian why milk is not just milk and why it has a higher value than the price supermarkets put on it. I don’t expect to get a higher price for my milk for any other reason than it’s truly worth it to the consumer. Through the website http://www.freerangedairy.org I am trying help explain the benefits of pasture-based milk production (free range) to consumers, in terms of animal welfare, environment and perhaps most importantly for those that buy it, milk quality.

      Through all this, i hope that consumers over here will realise that they can buy milk that is a truly nutritious food still at an affordable price. We are also working together to share ideas about how we as producers can cut costs on farm and improve efficiency – we are not looking for a handout or sympathy vote from those who buy our milk. If we can gain recognition for a way of farming that is both efficient and sustainable, whilst delivering a great product we can increase demand for free range milk and ultimatley increase the share of the retail price that comes back to the farmers.

      Like

  4. Pete Day

    Hi Marian,
    I am the fellow ‘Peter’ mentioned above.
    So why did I write to you?
    I am a primary school teacher so I don’t really have anything to do with the
    Dairy industry.
    We seem to be hit lately by all these charities trying to raise money for
    all these worthy causes – including overseas aid etc. Half the time you
    don’t know whether the money is going to help or just funding the money
    raising machine.
    We live in an area that has quite a bit of agricultural activity (NSW Central Coast.) Over the last few years we had some fantastic citrus farms that were ploughed in because of oranges coming in from Brazil! Similarly, our local dairy farms seem to have disappeared. Doesn’t make sense. In the media we have also heard of farmers stressed and even suiciding as a result of large corporations not giving them a fair deal, etc. I don’t really know exactly what is happening.
    So, as a family, we decided to make ‘buying Australian’ our charity.
    Instead of donating to charities, we will pay extra for a products, where
    possible, if we know the money is going to help sustain Australian
    agriculture or manufacturing. So we buy the ‘Dick Smith’ range of products and also directly of farmers where we can. Our local farmers market is also really good.

    As a part of this decision we stopped buying $2 milk. (We shop at IGA not
    Coles or Woolies). And that is where we got tricked by the DairyFarmers
    brand. We thought because it was almost double the price – $5 for 2 litre
    light white, and that it was once a co-op, that we were doing the right
    thing. But then I found out it was taken over by some Japanese company a few years ago and cut prices to farmers by 40%. Is this true?

    Sorry if this is a bit long winded but it is so hard to get information. I
    have been searching on google and that is how I found your Udderly Fantastic
    site. I still don’t know if milk on the shelf comes out of a co-op or big company so I will keep looking. it doesn’t seem to tell you on the packaging.

    Thanks again,

    Pete Day

    Like

  5. Ian A

    Marian, going back to your original comments…so what is a fair price for you? If you could wave the magic marketing wand, what things would you be telling people like me about your milk?

    Like

  6. I received a response from Pauls, processed by Parmalat in Qld. Their reply is that they pay the same price for milk regardless of whether its Pauls brand or home brand. They said they didn’t know where Coles or Woollies hid their loss on selling milk for $1 litre. So as a consumer I am paying extra because it’s Pauls brand, not because the farmer is getting more for that milk.

    Like

  7. Pete Day

    In my search to buy milk on the NSW central coast where the farmer gets a decent price and profit remains in Australia – I haven’t had much luck. Aussie Farmers Farmer Direct claim they are Aussie owned and buy direct from individual farmers. Do they return a good price for these farmers? Are they Fair Dinkum? If that’s so I’ll get my milk delivered from the Farmers Direct milkman.

    Like

  8. AT

    Just want to also add that whilst supporting the Murray Goulburn Co-op is a far better option than the homebrand; the far-and-away fantastic option is buying from dairy farmers who put animal welfare as an absolute priority – two brands come to mind – Barambah Organics and Elgaar Farms. Both are Aussie owned and both don’t engage in the killing of bobby calves within 1-5 days; Elgaar farms allows their bobby calves to bond with their mothers for 4 months, in which time they turn from monogastrics to ruminants, and apparently its much less stressful for both when the calf is taken and sold as veal (and also the calf has at least had some kind of life). With Barambah its fantastic, the calf stays for TWO YEARS! – after which they are sold. That’s a fantastic practice and we really should pay for to encourage it !!

    Like

    • Hi AT, I think Australian dairy farmers across the board make animal care a priority but “best practice” is very much open to debate. On our farm (and almost all around here), we rear calves away from the herd for the sake of the calves. I’ve written a post explaining why here.

      In respect to bull calves, we sell our male friesians to beef farmers who raise them until they are strapping two year olds. This is pretty common practice around here too. By the way, it is illegal to sell calves less than five days old and I don’t know anyone who kills them either. It’s pretty much etched into the DNA of dairy farmers to do everything we can to give our animals long, healthy lives.

      Like

  9. Eve

    Interesting article. I have stopped buying vilest and woollies branded milk and trying to stop shopping there for fresh produce. I almost think the only way to support farmers is to shop at farmers market. I wish there was another way the public can directly support the people who feed the nation.

    Like

  10. Rebecca

    This dairy issue has been on my mind for ages too. I live in an inner suburb of Melbourne. My parents had a dairy farm back in the ’70’s and had to shoot a lot of their stock because it wasn’t a viable business option at that time for them. I want to support Australian dairy farmers and pay them a reasonable price per litre for the milk, but I don’t know of any fresh brands. Devondale only sell long life milk in my local Coles and Woolworths. I have been intermittently buying Macro organic and Coles brand organic, but really what does that mean… the cows are eating non-sprayed fodder? who really knows? Does this automatically mean that these (organic) dairy farmers aren’t being ripped off? If anyone is able to point me to a brand that is supporting Australian dairy farmers and wholly Australian owned, that would be the ideal outcome, then I know where I stand and can make an informed decision when I shop.

    Like

    • Thanks for commenting, Rebecca and for trying so hard to support Aussie farmers. Yours is a quandary facing a lot of shoppers.

      The reality is that if you want farmers to receive a fair price for milk, you can still shop at the big supermarkets with a clear conscience if you buy a brand-name milk – whether organic or not. All fresh milk sold by Coles is produced by Aussie dairy farmers (although the processors might not be Australian-owned).

      If you can access a farmstead brand of milk, that’s great, too. Don’t feel guilty if you can’t find or afford a farmstead brand though – very, very few dairy farmers can afford to set up a milk processing plant after all and we are grateful that you are supporting us by choosing not to buy the generic stuff.

      The good news is that Coles will be stocking fresh, wholly-farmer-and-Australian-owned Devondale milk from July next year!

      Like

Leave a Reply - comments are moderated, so don't worry if your comment doesn't appear straight away, I'm probably just off feeding a child or a cow!

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s