Coles succumbs to milk price pressure

Marco Green
July 28, 2019

The price rise is the second this year - in March Aldi and Coles followed Woolworths in abolishing $1 per litre pricing on milk.

Dairy Connect CEO Shaughn Morgan called on Coles to follow the other retailers on Friday morning and highlighted the importance of passing the increase to the dairy farmer.

A spokesperson for Coles told Inside FMCG on Friday afternoon that it made the decision to increase the retail price of its Coles Brand milk, "following a review of market conditions and rising cost pressures across the industry".

Woolworths has announced a second 10-cent levy on the retail price of its own brand of milk just days after ALDI did the same.

Farmgate prices - the prices that processors are required to pay farmers for their milk - have been increasing since February.

Aldi did not say if the latest increase would be passed along to dairy farmers, but said it will continue to "maintain the collection and distribution of 10 cents per litre, implemented earlier this year and ensure the proceeds are passed onto dairy farmers in full".

ALDI announced its move on Wednesday, with Woolworths following suit on Friday and upping the price of its two-litre milk to $2.39 and three litres to $3.59.

Coles is now being pressured to follow suit.

Woolworths and Aldi have increased the price of the homebrand milk varieties by 10 cents.

WA Farmers dairy section president Michael Partridge said he would like to believe the extra money will go to dairy farmers, but he still sees it as a positive that retailers are finally starting to realise that milk prices were too low.

The spokesperson added: "We do not take price increases lightly, however these movements are necessary for building a long term sustainable Australian dairy industry".

"We're now a net importer of dairy products and the industry has basically collapsed in the last couple of years, so we need those prices to improve if the industry is going to stabilise or regrow at some stage".

'Due to these ongoing whole-of-market cost pressures, we have reviewed and adjusted the price of Woolworths Milk'.

In a statement, he explained as a result, the company "they had been paying suppliers even more for milk and other dairy products across the category over recent months".

"The ball is now squarely in Coles' court".

Mr Morgan said Dairy Connect is on the auditing committee which authorises the filtering of funds from Woolworths to the farmers and confirms the money has been a welcome boost for the industry.

"Our hard-working dairy farmers in NSW deserve a better deal and that's why I've welcomed the recent announcement by Aldi and Woolworths to increase the price of milk".

"Coles has a real opportunity here to play ball and deliver our dairy farmers a fairer price".

Earlier in the year it seemed there would never be an end to the $1-a-litre milk war but when the major supermarkets hiked the price and committed to flushing that money through to suppliers, dairy farmers were thrilled.

"We understand the intent of the Woolworths and ALDI price rises is to ensure that payment to farmers is sustainable, which is why it makes sense for Coles to do the same".

Mr Morgan urged Coles to follow its competitors and raise the price of its milk.

However, he said there would be challenges in rebuilding the milk supply.

While milk prices have taken the majority of the focus in the plight of the dairy industry, there are also concerns around the price of cheese.

Other reports by Click Lancashire

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