The National Farmers’ Federation has welcomed innovative thinking by Coles to improve the farm gate returns of some dairy farmers.
The supermarket today announced plans to ‘cut out the middle man’ and source milk direct from farmers for its Coles Brand Fresh White Milk two and three litre products.
“Farmers are price takers and unfortunately too often their profits are eroded along the supply chain,” NFF chief executive Tony Mahar said.
“Dairy farmers are at the mercy of farm gate prices set by processors and in recent years profit margins have been narrowed to the point where it is unsustainable for some farmers to continue to operate.”
Mr Mahar said a strong, viable dairy industry was vital to ensure all Australians could continue to enjoy fresh, Australian dairy products.
“There is certainly no silver bullet to the challenges confronting our dairy sector.
“The end of $1 per litre milk earlier this year was welcomed and today’s announcement by Coles is another step in the right direction.”
Coles’ new sourcing model, which starts next month, will apply to a limited number of farmers in Victoria and southern and central New South Wales.
“The new model gives farmers the choice of longer-term contracts with the aim of providing enhanced peace of mind and certainty, as well as importantly, more competitive farm gate prices,” Mr Mahar said.
Consumers will not be affected with the price of Coles Brand Fresh White Milk remaining the same.
“We know consumers like to support our dairy farmers and by and large they welcomed the doing away with $1 milk in March this year. We very much hope $1 milk is well and truly in the past.
“The NFF and Australian Dairy Farmers, look forward to learning the finer details of how the new sourcing arrangements will work and how they will serve to advance the interests of our dairy sector.”