AUSTRALIAN Dairy Farmers has welcomed Coles’ bid to source milk direct from farmers, saying it offered greater competition and potentially more transparency within the supply chain.
But the dairy farmer peak body wants Coles to commit to never returning to $1 a litre milk pricing which has damaged the industry.
Last week, Coles announced it would source milk direct from farmers under contracts extending for one, two or three years.
Coles said the move would deliver “more value to farmers, including fair and competitive farmgate prices and improved certainty of future income”.
The supermarket chain said it would continue to use Saputo to process and bottle the milk, but this time under a toll arrangement.
ADF said more competition for milk was healthy.
“This Coles initiative to source milk for Coles brand two-litre and three-litre products directly from farmers in Victoria and south and central NSW has the potential for greater transparency within the dairy supply chain between farmers and retailers,” the farm body said.
“We are hopeful that Coles will use this measure to build closer relationships with farmers, but we are seeking further engagement on how the initiative will work.”
“Coles has confirmed that this new arrangement will not change their commitment to pass the 10 cent increase to their two and three litre fresh milk brand back to suppliers in other regions via their processor.”
ADF president Terry Richardson said the $1 a litre milk issue had caused a “lot of heartache and a lot of damage” to the industry.
“We don’t want to see a return to $1 a litre milk,” he said.
The ADF had also welcomed Coles’ announcement it would invest $1.9 million through a “sustainable dairy development group” to fund research into improving sustainability in the Australian dairy industry.
The farm body said it wanted to work with Coles to ensure productivity gains were delivered to dairy farmers.