The big supermarkets are pushing the dairy sector toward another devastating milk price war, according to the industry’s peak representative body, Australian Dairy Farmers (ADF).
In 2011, Coles cut the price of its home brand milk to $1 per litre.
Major supermarkets Woolworths and Aldi followed suit shortly afterwards, accelerating the dairy industry’s decline.
Thirteen years later, after the dairy sector had made a small recovery from the original price war, Woolworths has again cut the price of its home brand milk with a claim it’s “passing on savings from its processor”.
With Coles and Aldi following suit in less than 10 days, the price of milk on supermarket shelves is now at its lowest level since 2011.
Jarrahmond dairy farmer, Dennis Reynolds, was unaware there had been a price drop.
“The price needs to go up because us dairy farmers are barely covering our costs at our current milk price,” Mr Reynolds said.
Calulu dairy farmer, Brett Keily, said the on-farm milk price had decreased by 14 per cent on last year and three per cent the year before and there was uncertainty in the industry.
“Effectively we’ve lost 17 per cent over two years, we’re at the mercy of the processors,” Mr Keily said.
“Cutting the price in supermarkets doesn’t affect me this year, but where does that leave us next year?
“It’s a complicated one.
“The export price has picked up but that doesn’t have as much of an effect anymore, we don’t export much, we’re nearly back to being self-sufficient in terms of dairy production.”
ADF is concerned a second milk price war is underway, at the expense of dairy farmers and processors.
“We all know supermarkets position dairy at the back of the supermarket and discount prices to get consumers in,” ADF president, Ben Bennett, said.
“They then make the majority of their profits on all the shelves consumers walk past on their way to the dairy section.
“Meanwhile, supermarkets justify their price decrease because processors have opened the season with a lower farmgate prices paid to farmers.”
Mr Bennett said a 10-15 per cent decline in farmgate income, coupled with high input costs meant dairy farmers were barely breaking even.
“This will only serve to encourage more dairy farmers to leave the industry, which is bad news for all Australians.
“Australia’s milk production has been declining for the past 20 years, with
dairy imports rising over the same period of time.
“It means Australian families will be forced to consume more imported dairy, and with an increasingly limited ability to choose quality Australian products.”
