coles

The totem of $1 milk

/ dairymilkmaid / 7 Comments

Two years ago today, Coles offered up milk as a sacrifice in the name of market share. It’s now become totemic in Victoria.

The reality is that about two-thirds of Australia’s milk comes from Victoria’s cows but not a lot of my farm’s milk ends up in the supermarket fridge.

We supply the Murray Goulburn Co-op, which processes about one-third of Australia’s milk and has the technology to make a huge variety of dairy foods and ingredients. It sells to the highest bidder, so the percentage that gets exported depends on how well global commodity prices compare with local dairy markets. In 2011/12, 49 per cent was exported, which is pretty typical.

But Victorian farmers are demoralised. Many are in desperate financial positions. The effects of the collapse in global commodity prices, skyrocketing energy prices, high feed costs and the high Australian dollar are clear but shrouded in secrecy is the impact of the supermarket war.

While $1 milk gets all the attention, other dairy products like butter and cheese have also been hit by the supermarket price war. Murray Goulburn has invested heavily in relaunching its supermarket brands and CEO Gary Helou infamously got all hot under the collar last month about Coles’ refusal to stock MG’s Devondale cheese. But nobody can talk about how Coles and MG negotiate our livelihoods behind the tinted windows of “Darth Vader’s Castle” as the Coles HQ is fondly nicknamed by its suppliers.

We’ll probably never know just what the damage has been – only that our situation is very different from that in states like NSW and Queensland where there is pretty much total reliance on fresh milk sales.

But what those claiming to be “the voice of reason” dismiss is the effect ‘milk that’s cheaper than water’ has on the psyche. It signals to farmers that a fair go no longer matters. And that’s what hurts the most on Australia Day.

Will Curtis Stone come to the rescue of Aussie farmers and foodies?

/ dairymilkmaid / 8 Comments

Coles is pushing prices down, down, down to help the Aussie battler, right?

Actually, it appears the driving force behind Australia’s supermarket wars is something much more prosaic – supermarket ROI. According to the Sydney Morning Herald:

“A report released in March by the Merrill Lynch analyst David Errington warns that the big three retailers, Coles, Woolworths and Metcash, will need to boost their earnings by $1.3 billion in the next three years if they are to make an acceptable return on the billions of dollars of investments made on acquisitions and capital expenditure. This is on a total earnings before interest and tax (EBIT) pool of $4 billion for the retailers.”

“In the past year, the profit growth of the entire sector has shrunk. Errington’s report says that in the first half of this financial year, the three food retailers delivered a combined EBIT growth of $150 million, a far cry from the $400 million-a-year earnings growth required to make an acceptable return. It will be interesting to see what the full-year earnings will be when the sector reports in the next few weeks.

“If Coles, Woolworths and Metcash fail to generate suitable returns on capital in the next couple of years, investors’ patience will run out and the groups will suffer a significant de-rating.

“It goes a long way to explaining the intensifying price war among the supermarket chains as they try to snatch market share to justify their investments.”

Doesn’t sound like the hostilities will ease up any time soon, does it? In the meantime, we can expect more and more private-label products – especially dairy – to flood the shelves of Coles and Woolworths.

Research by IBIS World Australia reported in the International Business Times showed that, already, “Up to 68 per cent of butter sold in the two supermarkets is private label, while for sugar it is 67 per cent, 56 per cent for bread, 55 per cent for fresh milk and 53 per cent for eggs”.

Alarmingly, the researchers predicted that “by 2017, the share of such products would make up one-third of total supermarket sales”.

Why am I alert and alarmed? Because this is bad news for anyone who cares about good food. When price becomes the only differentiating factor, quality must suffer right along the food chain and the ones who will ultimately feel the pain will be the little people – the farmers who grow the food and the consumers who eat it.

So where does this leave the foodies of Australia? I’ll let you draw your own conclusions.

No need to worry, I guess. Celebrity chef Curtis Stone will save us all. His spin doctors, Thrive PR, say this:

“And don’t think that Curtis is just a face when it comes to his partners like Coles. He is an active contributor behind the scenes to their business and marketing function. Their success is his success.”

Then again, maybe he’s blissfully unaware of the damage to Australian food caused by “his success”. I intend to appeal for help by emailing him at contact@curtisstone.com and am sure he’d love to hear from you, too.

While you’re at it, don’t forget to sign Lisa Claessen’s petition to Coles CEO, Ian McLeod by visiting http://www.change.org/en-AU/petitions/coles-up-the-price-of-generic-brand-milk-to-a-sustainable-rate-of-return-for-all

Sustainable dairy farming

/ dairymilkmaid / 9 Comments

Sustainability isn’t about the environment, animal welfare, profitability, business succession or manageability. For me, the definition of sustainability is all of them.

Australia’s dairy farmers are good at environmental sustainability – we are the front line environmentalists behind the Landcare movement. I like to think we are also exceptional when it comes to caring for our animals too. Profitability, not so good. Business succession, woeful. Manageability, well that’s debatable.

City friends think I live an idyllic life, frolicking among the cows but this lifestyle can bring stressors urban Australians would never imagine. According to the University of South Australia:

UniSA Psychology PhD student Alison Wallis knows what can drive a dairy farmer to cry over spilt milk.
For the past four years Wallis has been investigating the work stress of South Australia’s dairy farmers.
It’s a group she says at the time of the research had one of the highest incidences of work-related stress in the nation.
“There hasn’t been a lot of research done on the stress levels of those who are self-employed,” Wallis said.
“But we found that dairy farming produced some of the highest distress scores of many Australian occupations.”

Reading Tom Phillips’ excellent dairy blog, Pasture to Profit, I discovered we are not the only ones. Our trans-Tasman counterparts are also studying dairy farmer burnout.

It’s all amplified in times like these – when the rain won’t stop falling here in the south and when the prices won’t stop falling up there in New South Wales and Queensland – and so much of your success or failure seems to be in the laps of the gods (whether Thor or Coles).

On the other hand, it’s times like these that faith in human nature is restored by the generosity of people who care. People like Queensland ag teacher, Lisa Claessen, who, seeing the distress of her students, has taken to social media to petition the Coles CEO for a sustainable milk price. If you would rather not have UHT on your cornflakes, please add your name to her cause.

Design a warning label for cheap milk

/ dairymilkmaid / 11 Comments

The people who make milk and the people who drink it are on the same side. We all want safe, high quality food at a reasonable price without compromising the way we care for our animals or land. Put simply: sustainable food.

But when you stand in front of the supermarket fridge, there’s no way of telling what is sustainable. There’s nothing on the label that says: “WARNING: Buying milk at $1 per litre will mean your fresh milk will soon be flown to China“.

My advice is to keep it simple and steer clear of plain label milk. It’s looking after the interests of the big end of town and all the little people – milk producers and milk lovers – are the ones who will ultimately pay the price. It’s time for us all to make a stand – please tell everyone who will listen.

Coles won’t rule out CCTV on Australian farms

/ dairymilkmaid / 20 Comments

Despite a barrage of requests on Twitter and emails to the Coles executive interviewed by ABC Radio, Coles has refused to rule out video surveillance of Australian farming families.

All it would say was that it has “no plans” for the cameras. It’s a remarkable turnaround given the enthusiasm for CCTV on farms so publicly expressed by one of its most senior executives on Wednesday. Either Jackie Healing was way out of line or Coles could do with a little more transparency of its own.

Seeing as the retail Goliath decided not to respond, here’s my best attempt at answering the questions Coles apparently found too hot to handle:

  1. What do you consider are the benefits of video cameras on farm?
    The presence of the cameras could lift the awareness of animal welfare, while reassuring the wider community that farm animals are well treated.
  2. Do you see any potential problems?
    A family farm is also a home and I will not have our little family watched by millions via spy cameras. Imagine CCTV on your backyard streaming live to the internet. Totally unacceptable.
  3. Do you have any concerns that practices in the best interests of animals (restraint for vaccinations or veterinary procedures, for example) could be misconstrued by viewers?
    The viewers would deserve an explanation for some of the practices they’d see. Veterinary treatment for an eye cancer, for example, could very well look like animal abuse on video.
  4. Do you anticipate Australian farmers will volunteer to host the cameras?
    No.
  5. Have you (Coles) discussed the possibility of cameras with farmer organisations? If so, what has been the response?
    I don’t know.
  6. If Australian farmers do not volunteer to host the cameras, how will Coles respond?
    I am guessing they would refuse to pay for the milk but Coles won’t say.
  7. Does Coles plan to offer education for consumers about animal husbandry practices?
    This would be critical but was not mentioned by Coles quality manager, Jackie Healing. It would be a gargantuan undertaking.
  8. Where would cameras be mounted on a typical 500-acre dairy farm?
    To be effective, they’d need to be in the dairy, the calf sheds, the yards, the ute, the quad bikes, the tractor and the paddocks. That’s around 50 cameras on my farm alone.
  9. How would the dairy supply chain need to be “remodelled”?
    If Coles does intend to follow the Tesco example, it will try to contract farmers directly, giving it incredible control over the food consumers get and the price farmers are paid.
  10. Will Coles install cameras in the food preparation areas of supermarkets?
    I suspect not.

I am hoping that, despite its silence, Coles has got the message. Please pass it on. The supermarket wants to become a superpower and it has to hear loud and clear that Australians from every walk of life reckon it’s gone too far this time.

Coles wants video cameras on Aussie farms

/ dairymilkmaid / 15 Comments

In an ABC Radio interview yesterday, Coles quality manager Jackie Healing called for video cameras on Australian farms. I asked the Twitterverse to add to my list of questions for the retail superpower and sent the following email to Ms Healing and Coles PR contact, Jon Church:

Hi Jackie,

As a dairy farmer and blogger, I was fascinated to see that you are advocating a Tesco-style approach, including video cameras on farm. Would you care to answer some questions for http://www.milkmaidmarian.com? The blog is now quite popular with both farmers and consumers who would, I am sure, be equally as interested in exploring the topic further.

  1. What do you consider are the benefits of video cameras on farm?
  2. Do you see any potential problems?
  3. Do you have any concerns that practices in the best interests of animals (restraint for vaccinations or veterinary procedures, for example) could be misconstrued by viewers?
  4. Do you anticipate Australian farmers will volunteer to host the cameras?
  5. Have you discussed the possibility of cameras with farmer organisations? If so, what has been the response?
  6. If Australian farmers do not volunteer to host the cameras, how will Coles respond?
  7. Does Coles plan to offer education for consumers about animal husbandry practices?
  8. Where would cameras be mounted on a typical 500-acre dairy farm?
  9. How would the dairy supply chain need to be “remodelled”?
  10. Will Coles install cameras in the food preparation areas of supermarkets?

I shall post the questions online tomorrow and would be delighted to add your answers, provided they are no more than 100 words each and reach me by COB tomorrow. If this doesn’t suit, please let me know and I will do my best to provide a balanced response.

It will be interesting to see whether Coles is happy to elaborate, don’t you think?
 

The casualties of the milk war still to be counted and breaking news says they will grow

/ dairymilkmaid / 4 Comments

Media coverage of the senate inquiry’s report on the milk war by Coles suggests there have been only victors but this only tells half the story, for every war must have casualties. Instead, my reading of the report is that the government feels there is not much it can do about the fallout.

Gobbledegook like this:

…the ability for processors to ‘walk away’ from negotiations with collective bargaining groups (as highlighted during the committee’s 2010 inquiry), market realities such as the number of drinking milk processors in some areas and the fact that the processors must deal with the two major supermarket chains that dominate the grocery sector, can mitigate the benefits of collective bargaining arrangements.

and this:

Much of this information, however, concentrated on concerns about shifts in sales away from the processors’ branded milk products to the discounted supermarket private label milk. As a matter of overall principle, these types of free market outcomes should not be a matter for government. Many private label grocery products have grown in share in recent years…It should not be a matter for public policy to protect brands that consumers no longer value. It also does appear that the steadily increasing sales of private label milk—which have more than doubled their share of sales in supermarkets over the past decade—is a trend that is unlikely to be reversed.

…actually means that dairy farmers are standing right in the path of the cross-fire as Coles and Woolies spray litres (or should I say “rounds”?) of discounted homebrand milk at each other.

On top of all this, there are news reports that private labels will soon occupy far more supermarket shelf space. It won’t be just dairy farmers in the firing line. All of Australia’s food manufacturers and producers should see this milk war as simply an opening salvo.

How ironic then, that the most articulate description of the milk war’s impact comes from Woolworths:

…this price move has effectively re-based the price of white of milk across Australia overnight, and for an unknown period into the future, which also potentially devalues the whole milk category in the eyes of the consumer. In effect, the consumer baseline for price is now at 1990s levels, but with 2011 input costs for all parts of the supply chain.