COLES supermarkets has hit back at dairy farmers’ claims that its heavy discounting of milk prices is reducing farm gate milk prices and devaluing the product in the minds of consumers.
Speaking yesterday on Melbourne radio station 3AW, Coles spokesman Jim Cooper said the supermarket was funding the milk price cut and there was no impact on the price paid to farmers.
“We are taking a haircut on this,” Mr Cooper said.
He said export demand determined the farm gate milk price in Victoria, not the retail price of milk in supermarkets.
Coles’ response comes after south-west dairy farmers were urged on Tuesday night by Warrnambool dairy consultant Mike Hamblin to mount a tractor blockade of supermarket giants Coles and Woolworths in a bid to stop the milk price war.
Speaking at the dairy crisis meeting in Noorat in front of about 600 people, Mr Hamblin also called for south-west dairy farmers not to supply milk to distributors who supplied the supermarket “duopoly”.
“Let us drive our old tractors into town and park in the supermarkets,” he said.
Dairy farmers should also stop shopping at the two grocery chains, Mr Hamblin said. If south-west dairy families stopped shopping at the two chains, “it could hurt them in the local area,” he said.
The meeting took no vote on Mr Hamblin’s proposals but a sub-committee will suggest actions to address the financial difficulties being faced by many south-west dairy farmers.
Mr Cooper said Coles’ milk supply contract had rises and falls clauses that meant if the farm gate milk price rose, it would pay a higher price for the milk supplied to it.
He said he did not know what was meant by the claim that selling milk for a $1 a litre was devaluing milk’s true value.
“If customers can buy more of it, they are valuing it more,” Mr Cooper said.
Responding to Mr Cooper’s arguments, Australian Dairy Farmers president Noel Campbell told 3AW the growth in supermarket branded milk had been at the expense of other more expensive brands.
“The overall milk market is not growing. Farmers are taking the haircut,” Mr Campbell said.