NSW Farmers Urge Supermarkets to Think Twice About Price War

AUSTRALIA - New South Wales Farmers’ Association urged supermarkets to think twice about the effects ongoing price cutting is having on rural communities and families.
calendar icon 13 February 2013
clock icon 2 minute read

The statement by CEO Matt Brand follows the recent announcement by Coles that it is cutting the price of home brand milk in Coles Express stores to $1.00 per litre.

Mr Brand said processors should pay farmers fair prices if they wanted a sustainable dairy industry in NSW and supermarkets should support this.

He said price cutting by supermarket chains had resulted in 30 farming families in NSW leaving the industry in the 12 months to June 2012.

“Milk priced at $1.00 per litre does not give farmers a fair go. There is not enough money in the supply chain to support retailers, processors as well as farmers,” Mr Brand said.

“There is a lot of work involved in producing, refrigerating, transporting, processing, distributing and delivering fresh milk on a daily basis.

“We know from research done in the UK that although consumers might only be paying $1.00 a litre for milk, they will be paying for this discounting through higher prices on other products.”

Mr Brand said Coles’ milk price messages released through social media could confuse consumers because it focussed on the farmer’s share of revenue for 2 litres of milk even though its entire milk marketing campaign is based around $1.00 per litre.

He said uncertainty in the industry caused by intensity in retail competition, disruptions caused by changes in supermarket branded supply contracts and uncertainty surrounding processor milk requirements had impacted on farmer confidence.

“Uncertainty has also led to a reduction in investment at a time when it is vital farmers develop their farms to meet anticipated future growth in demand,” Mr Brand said.

“NSW Farmers urges consumers to support dairy farmers by buying branded milk. Branded milk gives dairy farming families a fair price for the work they do. Home brand milk priced at $1 per litre (which is cheaper than bottled water) does not.”

NSW Farmers recently met with Coles and Woolworths to discuss a broad range of issues including supply chain solutions for the dairy industry. The association is also working with Australian Dairy Farmers to address the issues of the immense market power of the retailers and ensure fairness for their suppliers and farmers.

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