Concern for dairy farmers as Coles cuts milk prices

According to Australia Food News, this ‘has nevertheless caused consternation throughout the dairy industry’.

Coles reduced the price of a 2-litre bottle of own-brand milk by 47c to just A$2, which was then matched by its competitor, Woolworths. Coles said that the cost of reducing its milk prices would be absorbed by the business, and formed part of the company’s ‘Down Down’ campaign to reduce prices on staple items.

Woolworths said that it would also be absorbing the cost of the price drop, but couldn’t say how long the situation would last.

The Australian dairy industry has reacted with concern, particularly at the possibility that the big two will begin passing the cost of the price drop on to farmers once the own-label products are established.

“We’re now facing the bleak prospect of retail milk prices reaching a point that’s unsustainable for the milk value chain,” said Brian Tessmann, Queensland Dairyfarmers’ Organisation president. “This will flow back through the processing sector and ultimately to farmers. Commodities around the world are rising, and so are farming costs, but milk prices are under unsustainable downward pressure from the retailers.”

Source: Australia Food News