Milk wars: Farmers lash out at Woolworths' AFL dairy ad

Jared Lynch
May 27, 2015
inShare

Brisbane Lions and Gold Coast Suns aren’t the only Queenslanders that are struggling – just take a look at the state’s dairy farmers.
It’s a fair comparison. Supermarket giant Woolworths has signed a deal with the AFL to market its private label milk as the league’s official basic dairy beverage.
It is the same product that Woolworths slashed to $2 for two litres and $3 for three litres more than four years ago.

Woolworths slashed the cost of its private label milk to $2 for two litres and $3 for three litres more than four years ago.
The discount, known as the milk wars, came after rival Coles cut the price of its private label milk to $1 a litre on Australia Day 2011, sparking criticism from dairy farmers across the nation who said the pricing was unsustainable and would squeeze the margins of dairy processors.,
But Woolworths’ AFL sponsorship aims to change that – at least if you take a look at theaccompanying advertisement, which features the line “proud supporters of Australian farmers”.
Dairy farmers in Queensland, however, are puzzled at how Woolworths is fulfilling its claim.
Australian Dairy Farmers President Noel Campbell says taking inflation into account milk was no being sold for the equivalent of about 87 cents a litre.
A spokesman for the state’s peak dairy body, Queensland Dairyfarmers Organisation (QDO), said since the milk wars began – which coincided with severe floods -130 farmers have quit the state’s dairy industry, leaving a total of 455.
“This has meant a huge loss of fresh milk for Queensland and our State is now short of producing fresh milk for itself across the year,” the QDO spokesman said.
While national milk production is up 2.9 per cent in the 12 months to April, Queensland’s production has plummeted 5.9 per cent in the same period, according to Dairy Australia.
“Queensland Dairyfarmers’ Organisation always encourages consumers to think twice about putting $1 milk in their supermarket trolley,” the QDO spokesman said.
“Branded milk has a real and positive impact for farmers and will maintain consumer choice and product innovation into the future.”
A Woolworths spokesman said the supermarket doesn’t set the price dairy processors pay farmers and its private label milk accounted for 4 per cent of Australia’s total milk pool, so ” farm gate milk prices are driven by other much larger factors”.
Australian Dairy Farmers president Noel Campbell said while international prices mainly determined farm gate prices in Victoria and Tasmania – which export about half of their production – the fact that the supermarkets hadn’t changed the price of fresh milk in four years was a concern.
“We are still concerned that it’s still $1 a litre because if you have an inflation rate of 2 or 3 per cent, it’s now equivalent to about 87 cents a litre,” Mr Campbell said.
“That’s an absolute no, no as far as we are concerned because there’s no upside. Everyone else in the community gets an upside.”
Mr Campbell said Australian Dairy Farmers was also concerned the discount would hinder product innovation from processors.
“There is not likely to be much innovation, given they have squeezed margins for processors. If they want to look at extended shelf life or some other innovation they aren’t likely to do it because there isn’t the money to do it”.
In February 2014, Woolworths launched its Farmers Own brand, which bypasses milk processors with the supermarket chain buying the product directly from farmers.
Mr Campbell said while Woolworths’ was correct in saying it was helping farmers through this initiative, it was a limited market.
“In NSW, I think there are seven farmers involved, in Queensland I think there are two farms involved so as far as any upward pressure in pricing, it’s not really happening because of the number of farmers involved,” he said.
“Yes, they are right in saying they’re helping out a dairy farmer, but not it’s not [helping] the mainstream industry.”
But a Woolworths spokesman said its private label milk was “great value for our customers”.
“We have recently signed a number of long term agreements with processors to give them and farmers certainty and allow them to invest in their businesses,” the spokesman said.
“Woolworths is very proud to be the official milk of the AFL. Milk is one of our most important products and we’re very proud to be able to feed fresh talent by working with the AFL to promote the game in communities, particularly in rural and regional areas.”
The spokesman said Woolworth was committed to supporting farmers across a number of agriculture industries.
“Around 96 per cent of our fresh fruit and vegetables are Australian grown, as is 100 per cent of our meat,” the spokesman said.
“All our Select frozen vegetables are Australian grown and sourced through Simplot in a long term supply agreement, and our Select deciduous tinned fruit is also Australian grown and supplied by SPC Ardmona.”