Diversify or die, dairy farmers told

Coles and Woolworths’ decision to drive down milk prices means dairy farmers must diversify or die, MP says

By Brad Gardner | February 24, 2011

Coles and Woolworths’ decision to drive down the price of milk means dairy farmers must diversify or die, a federal MP says.

Liberal MP Russell Broadbent says the livelihood of local farmers is being directly threatened from the price reductions because they have no other market beside the big retailers to sell their goods into.

Coles and Woolworths recently slashed the price of home-brand milk to $2 for two litres, with Coles also reducing a litre of milk to $1.

"The problem is this: if you are a farmer who is not connected to a major exporter that has a diverse range of opportunities for supplying the world, you are probably already finished if we have regard to what the two major supermarkets have decided to do," Broadbent says.

"You are probably already gone if you are supplying that market and you are unable to diversify what you are selling."

Coles, Woolworths, Franklins and Aldi will appear before a parliamentary inquiry over their decision to significantly reduce the price of milk.

Franklins says the the price is unsustainable but it acted anyway to compete with Coles and Woolworths.

Maranoa MP Bruce Scott has labelled the actions of the two retailers "unconscionable".

"It is about time these supermarket giants were brought to account," he says.

The parliamentary inquiry will look at the impact supermarkets’ decision has had on wholesale milk prices, production, competition and whether any legislative changes are required.

According to the supermarkets, they will absorb the cost of reducing the retail price of milk.

A ‘fact sheet’ on Coles’ website claims the company paid a higher fee for Coles brand milk last month to ensure processors did not pass on a lower price to farmers.

"Coles increased the price it paid to milk processing companies in mid-January and is fully absorbing the cost of the lower retail price in a lower profit margin,"’ the ‘fact sheet’ claims.

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