industryfocus
The
milk
wars
Greg Sweetnam investigates the cost to dairy farmers
of the milk price wars raging in Australian supermarkets.
Australian farmers are undoubtedly
resilient, but the discounting of milk by the big
supermarket chains – known as the milk wars – has
tested even the hardiest of our dairy farmers. The
result for milk producers has been lower returns,
in some cases less per litre than the cost of milk
production, and that has caused many to leave the
industry and most to question their future.
As Queensland Dairyfarmers' Organisation
(QDO) figures show, since Coles dropped its storebrand milk to $1 per litre on Australia Day 2011
to grab market share, and bitter rival Woolworths
matched that, farm incomes have been slashed. QDO
president Brian Tessmann says milk at $1 a litre is
just not sustainable and milk producers are fearing
the worst. Milk processor margins have been severely
cut and the farmgate milk price paid to dairy farmers
has been reduced drastically since the milk wars
began, Mr Tessmann says. The last time milk was
$1 per litre in Australian supermarkets was 1992.
The QDO estimates that about half the state's
600 producers have experienced a drop of income of
about $40,000 and 40 producers have exited the
industry in the past two years.
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