ADF expects Coles to pass on WA increase to other states

By once again passing on an increase in milk price in Western Australia alone Coles is acknowledging that its pricing of fresh milk is unsustainable.

The increase of 3.3 cents per litre to processor Harvey Fresh is the second in WA since Coles dropped the price of milk to $1 per litre on Australia Day last year*.

Australian Dairy Farmers (ADF) Vice President Noel Campbell says dairy farmers now expect Coles to pass on similar price increases to other processors so they can flow through to farming families.

“Clearly dairy farmers in Western Australia are doing it tough but they are certainly not alone. Milk priced at the unsustainable level of $1 per litre is also hurting farmers in Queensland, Northern NSW and to a lesser extent South Australia,” said Mr Campbell.

Drinking milk takes up all, or the majority, of milk production in these areas.

“The key point is that Coles’ prices for milk are unsustainable and Coles has proven this by giving Harvey Fresh a 3.3 cents per litre increase,” said Mr Campbell.

It is an admission by Coles that their ‘down, down’ campaign is having an impact on suppliers in the Australian domestic market.

Mr Campbell said “Coles also needs to publicly acknowledge that by reducing the price of milk to $1 per litre on their home brand milk they made a mistake and set prices that are unsustainable.”

The last time milk was a $1 per litre was around 1992. No-one can live on a wage set at 1992 levels. Would Coles’ executives be willing to go back to 1992 wage levels?

ADF is seeking an explanation from Coles on why they took this action in WA alone because it does not seem logical to increase prices in one market alone, when their pricing tactic impacts the whole of Australia. They must understand that the price on the retail shelf is linked to what farmers ultimately get paid.

Processors holding Coles contracts across Australia have indicated that milk priced at $1 per litre is hurting them (see attachment 1).

“It is time Coles raised prices to a sustainable level and stopped their marketing tactic. This recent increase in WA urgently needs to be replicated nationally.”

*In February last year Coles announced an increase of 5 cents per litre to Brownes Dairy, the then holder of its fresh milk contract.

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