On 26 January Coles announced that it was cutting its home brand milk to $2 for a two litre container of Coles Brand milk.
ADF Vice President Chris Griffin said, ‘Coles is selling milk at an unsustainable price’ and challenged Coles to prove that the milk price cut would not affect farm gate milk prices for Australian dairy farmers.
On 3 February Coles announced price cuts for its home brand butter and cream.
ADF suspected the drop in the price of milk would be the thin edge of the wedge and the cream and butter price cut proves it.
The Australian Dairy Farmers (ADF) now calls on consumers to support dairy farmers and their families and buy ‘branded’ milk, butter and cream products following this latest marketing ploy.
These price drops will increase the price difference between large retailer supermarket brand milk and milk processor branded milk. Shoppers will opt for supermarket brand milk which have lower returns to processors and that will then flow on to the farm gate.
Ultimately it will also lead to less choice for consumers as the experience in the United Kingdom has shown.
The ADF has calculated that the cost to Coles of the milk price cut alone if, as they claim, they do not pass on the price cut will be over $30 million per annum.
It defies logic to think that Coles will ‘fully absorb’ this amount of money. It is inevitable that it will be passed on to either consumers, through higher prices on other products, in Coles’ stores or to dairy farmers through lower prices for their milk.
ADF Vice President, Chris Griffin, has noted that in media comment Coles has repeatedly refused to rule out dropping prices for processors and farmers in future contracts.
‘We’re not saying what will happen to our rolling contracts this year’ a Cole’s spokesman said in Stock and Land on 3 February.
ADF Vice President Chris Griffin again challenges Coles to prove that this marketing tactic will not affect farm gate milk prices for Australian dairy farmers.
Chris Griffin, ADF President
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