Queensland dairy farmers: “This is the first hit”

Posted by Nicole Eckersley on 16th March 2011

Queensland Dairy Farmers Peter Brown, Ross McInnes, and Ivan TeeseThe Queensland Dairyfarmer’s Organisation says that dairy farmers have been hit with the first impacts of the major supermarkets’ milk price war.

After receiving their February milk cheques in the last week, the QDO says many Queensland farmers are facing a large drop in income for the month. They say that this drop in income can be directly linked to the $1/litre supermarket brand milk marketing campaign, initiated by Coles on Australia Day.

Southern Queensland dairy farmers Peter Brown, Ross McInnes, and Ivan Teese (pictured) say they have already seen their farm incomes drop due to the supermarket retail milk price war.

Kingaroy dairy farmer and president of the Queensland Dairyfarmers’ Organisation, Brian Tessmann, said farmers supplying processor Parmalat had part of their milk cheque linked directly to the sales of processor proprietary-branded milk.

“As such, since the January 26, Coles’ cutthroat discounts have increased the sales of Coles branded milk at the demise of proprietary branded milk sales. When processor proprietary branded milk sales drop, our milk income drops,” Tessmann said. “It’s that simple.

“This is the first hit at the farm gate from the milk war. If Coles continues on its cutthroat approach, there will be more to come.

“Since Coles decided to kick the dairy industry in the guts on Australia Day, we know that they have gained market share for their own brands of milk and have devalued milk at retail right across the nation as other retailers have dropped their prices to try and protect market share.

“At the moment, Coles executives continue to deny that there is even a problem. They continue to mislead their consumers and the government by saying that this won’t impact on dairy farmers. These milk cheques are proof that they are wrong and the impact is happening right now.

“They have also claimed that prices for dairy farmers went up last year, but in Queensland they went down by some 15% and in NSW and Victoria by 10%, for milk which went into Coles bottles.

“It really is an insult to all Australians for Coles to ask consumers to trust them.

“To devalue milk by hundreds of millions of dollars in the domestic market and claim that there will be no impact, defies logic.”

“The Coles executives need to get some mud on their boots and visit a Queensland dairy farm and meet with the QDO.”

Tessmann said that the January milk incomes were also hit by a drop in production from the flood, but a full breakdown of the figures still revealed that the retail price war was having a direct impact and if the cutthroat discounting continues the impacts will grow, undermining the sustainability and viability of our industry in Queensland and other regions which produce milk for Australian consumers.

“For a million litre farm even a reduction of just one cent per litre adds up to a loss of $10,000 across the year. At the end of the day, it can be the difference between a business being viable or not. Coles has dropped some of the milk brands by up to 33% or 49.5 cents per litre.

“We implore Coles to understand this and to acknowledge the devastating impact that their actions will have on the dairy industry if it is not stopped now.”