"Right now, many Australian dairy farmers are at the crossroads, contemplating whether it's worthwhile staying in business or not. This is not a decision many of them wish to take, but the discounting of milk to a dollar a litre, started by Coles in January last year, is decimating the industry and unless the supermarket price wars cease the Australian dairy industry will be nothing more than a pile of ashes. Since discounting began in January 2011, over 50 dairies in QLD alone have shut down and left the industry. Farmers and their families are being pushed to the brink, emotionally and physically as they strive to run their businesses. The closing of our dairy farms won't just affect our dairy farmers; it will affect a large number of regional and urban towns with job losses in all the businesses our dairy farmers support."
"But these prices are terrific for the consumer"
Beyond this lies the dilemma for consumers. Whilst discount milk in the form of generic brands sounds enticing, it is putting our Australian fresh milk supply at risk. Using cheap milk as an incentive for consumers is in fact misleading them to think the dairy industry can operate sustainably under these conditions. The long term implications are more likely to be less choice and availability of fresh milk, and when the supermarkets have complete control of the market with store brands, consumers will actually pay more for fresh milk, like the UK. At the moment it is estimated supermarkets control about 70 percent of all milk sales in Australia.
Supermarket discounting of fresh milk is forcing processor brands like Paul's, Dairy Farmers and Norco off the shelf, sending processors broke and this is being passed back down to the farmer. It has been estimated that processors have lost over 66 million dollars since discounting started.
A healthy functioning dairy market allows for innovation and greater funds for areas that are important to consumers, such as welfare and environmental issues. This is no less important to dairy farmers who rely on a sustainable price to further improve these issues. A healthy dairy market supports the communities and industries around them. The loss of even one farm is a loss to other businesses as well. There is nothing to gain for anyone except the supermarkets by offering prices on generic milk that do not represent the true cost of production.
We are not asking for Coles to get rid of generic milk, but to consider that a compromise can surely be struck between all parties. Why can't Coles consider raising the price to a level that keeps value for the customer and allows the dairy supply chain to keep sustainably supplying Australian customers with fresh healthy milk.
Coles like to send out the message that they support a sustainable farming community; does this not apply to dairy farmers? Similarly, Wesfarmers, who started out as a farmer's cooperative in 1914, should be ashamed for suggesting it is "acting in accordance to high ethical standards". The time has come for more than lip - service to this claim.
- Ian McLeod, CEO of Coles & Richard Goyder - M.Director of Wesfarmers
Dear Ian McLeod, Coles CEO and Mr Richard Goyder, Managing Director of Wesfarmers
As consumers, we call this issue to your attention, in support of sustainable dairy foods.
Milk sold at a dollar a litre jeapordises something Australians value highly and have always taken for granted - fresh, high quality, nutritious and ethically produced dairy foods.
Coles' pricing tactic has huge implications for Aussies on the land and ultimately, the sustainability of our rural and regional communities. In January 2011 you made the decision to reduce the cost of generic milk; you now have the ability, which is timely in the Year of the Farmer, to reverse the decimation this has been causing.
We express our concern and disappointment, with our avoidance of any Coles labelled dairy products. Many of us have made the choice to vote with our feet and look for other places to shop as we cannot ethically support a concept that pays lip service to our farmers.
It's time for Coles to make a real and lasting difference by offering milk at a fair cost, and negotiate a price that allows a sustainable rate of return for all sectors of the dairy supply chain. We urge you to do this so generations of Australians can look forward to the enjoyment of fresh, nutritious, ethically produced milk produced by Aussie farmers.
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