Woolies, Coles move away from $1 milk but ignore the biggie: 60 cent cheese

Coles has followed Woolies’ move to increase the price of its 3 litre milk from $3 to $3.30 and both have promised they will donate the entire increase to farmers affected by drought.

I’m rapt that the supermarkets are finally doing something to loosen the screws. Farmers are suffering death by a thousand cuts and even this limited relief is certainly very welcome, particularly in NSW, Queensland and Western Australia, where most of the milk ends up in the supermarket fridge.

To everyone who has spoken up for farmers, thank you from the bottom of my heart.

But, and it’s a BIG but, at the risk of sounding like a whingeing farmer, there are three inconvenient truths that will continue to see farmers quit dairying:

  1. The drought is big trouble, yes, but there’s an exodus of dairy farmers (including those not hit by drought) because there’s simply not enough profit at the farm gate.
  2. The milk that goes into Colesworth’s $6 cheese is worth less than 60 cents per litre.
  3. Only about 13 per cent of the milk produced by Australian dairy farms ends up as fresh white milk on the supermarket shelf, even less in Victoria where most of the cows live! The biggest use for our milk is…cheese.

In other words, it’s like putting a band-aid over an ulcer. Better than nothing but you’re hardly going to save the patient.

In an interview with Milk Maid Marian, federal Agriculture and Water Resources Minister David Littleproud said he was open to applying a levy to other dairy products, such as cheese, so long as industry asked for one.

In a response to Milk Maid Marian’s question about cheese, Coles would only talk about milk and, at the time of posting, I had no response from Woolworths. Stiff cheddar, I guess!

One thought on “Woolies, Coles move away from $1 milk but ignore the biggie: 60 cent cheese

  1. Again the supermarkets are playing their games with this levy, rather than playing a straight bat and keeping it simple and effective.

    Now this 10-cent levy is now going to be complex confusing and now counter productive. No one is working together here especially the supermarkets. They are doing this on there terms so the oppression supermarkets don’t get some sort of competitive advantage.

    They are now segmenting the milk for this levy from the regular $ 1.00 milk as to not cannibalise that product and have it’s price rise as well. The total volume for this will now be very small. They now also want that milk directly from drought affected farmers and putting the cost for this on the processors. They are now inflating the true cost of this special product way beyond the cost of the 10-cent levy

    This levy if its going to work will and should be a blanket 10 cent levy on all white drinking milk brand and home brand it’s the only way it will really work and be effective.

    The supermarkets are now going to make this levy applicable to a very small section of the wider community that are really paying attention to all this and have the time in their busy lives to stop at the milk cabinet to make that conscious choice.

    What Woollies have done is just create another product line or category for their home brand business nothing more and nothing less. It still retains its margin and protects woollies bottom line in my view.

    Until the AG minister has the fortitude to hold the supermarkets to account on this and forces them to put a blanket levy on all white drinking milk he will be seen as just a puppet of the supermarkets.

    This could all be so simple if he really showed some real leadership on this, as people are really hurting and our leaders keep planing games and politics on this. They have no hope of winning the election with this sort of leadership

    60 cents cheese is just another symptom of the whole issue regarding supermarket power

    “Dairy processors need to be honest with farmers. We have written to a number of processors warning them not to mislead farmers by blaming private label milk contracts for the prices offered for milk at the farmgate,” ACCC Chair Rod Sims said.

    “We’re concerned this is misleading as the power lies with processors to raise the farmgate price paid to farmers, and then pass these higher farmgate prices on to supermarkets.”
    “Almost all contracts between processors and supermarkets for the supply of private label milk allow processors to pass-through movements in farmgate prices to supermarkets. This means processors set their farmgate prices independent of the supermarkets’ retail prices,” Mr Sims said.

    The ACCC has heard reports from a number of dairy farmers in NSW and Queensland who are struggling to cover costs in the face of drought conditions. These reports allege that processors say they cannot pay farmers more for their milk because of the low $1 per litre price for private label milk. Given the existence of these pass-through clauses, this is not correct.

    So now with regards to the ACCC and what they have now said about $ 1.00 milk and processors ability to pass on rises in raw milk purchase costs back to supermarkets and assume the same applies to 60 cent home brand cheese.

    Would it not just be simpler for the AG minister to back or demand the processors do this on farmer’s behalf? We need to stop playing politics and actually do something that changes the current situation for the better, rather then congratulate the supermarkets for their cooperation and leadership on this as the AG minister has done, because they are the problem or is it really the processors that we should be holding to account here so many questions but still no solutions the Merri go round continues

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