Pull the other one, Coles!

pull the other one coles

Dear Australian milk drinker,

Last week, Coles proclaimed their innocence in lower farmgate prices for dairy farmers as a result of their discounted private label milk.

Nice try, but they’re miserly with the truth.

They fail to mention their battle for supermarket market share with Woolworths. Discounted milk is a loss leader; it is designed to lure shoppers into stores with lower priced goods (in return for greater margins on other items).

They fail to mention their battle for milk market share with processors. Private label milk has higher margins for supermarkets at the expense of processors.

They fail to mention their battle for retail market share with corner shops and independent stores. Over ten years ago, supermarkets sold less than 25% of milk, today they sell over 50%.

It’s about stealing market share, not helping Australian families “meet rising household costs”.

They also failed to mention that Woolworths and other supermarkets have followed their lead.

In response to the pressure on their margins and the changing requirements for milk supply, processors adjusted their intake requirements and pricing.

This hits hardest in states reliant upon domestic milk sales. Since the milk war began, 55 Queensland dairy farmers have left the land. Dairy farms in the Hunter region in New South Wales are closing in quick succession. Despite having export options, Victorian dairy farmers are quite vulnerable too. Many remaining dairy farmers Australia-wide are forced to sell milk below the price of production.

Farmers are subsidizing Australian families’ cost of living, not Coles.

“As a 4th gen dairy farmer with a young family I personally would love to see every consumer get this message very clearly. We are fed up with getting paid ridiculously low prices (often below production costs) for our milk. Here in Queensland, we have just had another price ‘restructure’ that will see us getting paid LESS per litre than we were in 1997. How many businesses do you or anyone else know that can operate successfully getting paid less than they were 16 years ago?? I bet if Coles and Woolies were told they had to operate on 1997 income with 2013 expenses they’d close their doors tomorrow! Boycott all home brand milk and support the farmers by buying labelled product only,” wrote Robbie Radel.

Dairy farmers have had enough.

We can support them by

The government can

  • Break up the duopoly.
  • Co-invest in farmer-owned regional milk processors.
  • Co-invest in regional pathways to market.
  • Reopen the dairy inquiry.

Related elsewhere
ACCC: Coles Supermarkets Australia Pty Ltd
Sydney Morning Herald:Colin Kruger, “Counting the cost as the dust settles in supermarket wars“, March 29, 2013.
XCHEQUE: Kai Tanter, “It’s not dairy farmers that are in denial“, February 8, 2013.
YouTube: Cassmacd, “The TRUTH about the supermarket milk price war“, February 26, 2013

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