WOOLWORTHS may have effectively ended the $1 milk price war by imposing a 10pc price increase yesterday, but a South East dairy industry heavyweight has warned the fight is not over for Australian milk producers.
The supermarket giant announced on Monday it would raise the price of its home brand milk varieties by 10 cents with farmers to receive “every cent” of the increase in the face of an “extremely tough” outlook for the nation’s dairy sector.
Both Coles and Aldi – which will soon co-exist at the former Fidler and Webb site in Mount Gambier – are yet to follow suit despite the pleading of numerous industry groups.
South Australian Dairyfarmer’s Association (SADA) president John Hunt said the price jump was a “step in the right direction” by, but the Allendale East dairy farmer reminded the public the fight was not over yet.
“It’s important that Woolies has recognised $1 milk is unsustainable for the industry, but a 10c increase will not make a huge difference,” he said.
“The price change is definitely a step in the right direction and we are celebrating the small win, but much still needs to be done to keep the Australian dairy industry viable.
“Consumers must still be focused on purchasing branded milk to support our Aussie farmers as $1.10 still greatly devalues the market price.”
In relative terms, $1 in 2011 is equivalent to around 89c in 2018, with industry stakeholders claiming the 10pc increase only returns the price to where it was in 2011.
Furthermore, dairy sector proponents believe the price change is recognition of the harm that is being done by the $1 offer, which does not address the underlying flaws in the supply chain such as drought, feed, energy and fuel costs.
Woolworths Group chief executive Brad Banducci said the organisation made the decision to impose a price increase after consultation with national stakeholders, including the Australian Dairy Farmers Association.
“In our consultation with industry bodies, we have heard the outlook will continue to be extremely tough for dairy farmers right across the country.
“This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live.
“It is clear something needs to change and we want to play a constructive role in making this happen.”
The Drought Relief Milk payment model introduced by Woolworths across the eastern seaboard saw limited varieties of its self-branded milk hit the shelves with an added 10 cents per litre cost, with money raised from the price increase injected back into the dairy industry.
Mr Banducci hoped a similar positive effect would be felt from the latest change.
“While we’re realistic this will not solve broader structural issues, we hope it will help inject much needed confidence into the sector and the regional communities dairy farmers do so much to support.
“We’re acutely aware of the budgetary pressures facing many of our customers and have not taken this decision lightly.
“We believe it’s the right thing to do and a key step in shoring up fresh milk production in Australia.”
Picture: FILE IMAGE
