Dairy farmers fight back

Last Friday Jane Burney, the wife of a fifth generation Oxley Island dairy farmer, posted a comment on the Coles Facebook page. She was angry after watching a Coles ad on television, in which the supermarket chain claimed to support Australian farmers, and decided to let Coles know exactly what she thought of their ‘support’.

The comment went viral as more than 75,000 people ‘liked’ the post, and more than 4,500 people commented on it. Here is what she said:

Dear Coles,
Your $1 per litre of milk deal is killing the lifeblood of our dairy industry. The ramifications of it are finally rearing their ugly head. Dairy Farmers has announced it’s price for Tier 2 milk at 13 cents per litre. This is not sustainable in an industry where costs of production can be as high as 30 cents per litre. The consumer is paying $1 a litre and the only winner here is the supermarket. It is time for us to go back to the old fashioned way; in which we bought real milk that tastes like milk; no permeate and where our fruit and vegetables were grown in our beautiful country. Stocking garlic from China, Argentina. What is going on? Obviously it is cheaper to buy it from overseas then from our country; grown in God knows what. And for our farmers and the towns they support and encourage capital growth; it is heartbreaking. Your latest ad campaign sprouting that you support Aussie growers in insulting. You are misleading the public in how you support Aussie growers. Not only have you ruined the fresh milk market but you have also lowered the price on your cheese and butter. The only winner here is you. Eventually all the Aussie growers you so called support will be out of business. Dairy farmers who work 7 days a week, 14 hours a day, who have been dairy farming their whole life, whose cows are their whole life will have to stop farming as it is no longer economically viable to continue. Our “fresh” produce will be flown in. The consumer will be stuck buying expensive, overseas produce. What will happen to our economy and our country towns? I urge people to think about what they buy. The more Australian made produce we buy, the more our money stays here and benefits us. Your $1 milk is a nail in an already suffering coffin. I am ashamed to watch you ads and us farmers burn in resentment when we do so.

Coles initially tried to hide the Facebook post, but gave up after 40 other people republished what Jane had written. Coles has since issued a number of public responses, none of which suggest the supermarket chain is reconsidering its $1 milk policy.

To find out more read Foodmag’s article Coles doesn’t respond to 73 000+ consumers concerned about milk price wars.

Comment – The real cost of milk

Two-and-a-half years ago Coles introduced its $1 milk policy. Now Australia is finally waking up. When a company such as Coles offers you such an extreme discount, you have to ask yourself who is getting the short end of the stick. If it isn’t you, and it isn’t Coles, then who is losing out?

Jane’s letter gave voice to the thousands of Aussie farmers who are being bled dry by large supermarket chains. The farmers who are working twice as hard for half the money, the farmers who are selling family farms, the farmers who are going broke because you and I have been sucked in by a lower price.

How are the supermarkets achieving such an extreme price cut? They say they haven’t lowered what they are paying farmers, but that’s only half the truth. From what I understand (and this is very much a simplification) the dairy industry works on a two tier system. Dairy companies tell dairy farmers or cooperatives how much milk they think the market will demand. This quantity of milk is then deemed tier one milk, and the farmers get a reasonable price for it (this is the milk Coles refers to when it says it is paying farmers the same amount per litre for milk). Tier two milk is anything the farmers make outside that estimated demand.

As one farmer explained, he gets 18 cents per litre for tier two milk, which costs 40 cents per litre to produce. In order to pay farmers less, the dairy companies simply underestimate how much milk the market will demand, and then top up their supplies with tier two milk. This means they pay less of the tier one price, and more of the unsustainable tier two price. As milk is a perishable product the farmers can’t just decide to hold on to it, and 18 cents per litre is better than refusing to sell and getting no cents per litre. Very sneaky, Coles et al.

On a completely unrelated note, Coles recorded a three per cent growth in sales last Friday.

Do you think what Jane said is correct? Is Coles to blame, or is the supermarket doing the right thing by keeping its prices low? Would you pay more for milk if you knew the profits would get back to farmers?