A move by one of the supermarket giants to cease selling milk for $1 per litre is not expected to have any impact in the Bega Valley, with critics saying it will also do little to improve conditions in the industry nation-wide.
From Tuesday, February 19, Woolworths began to sell two and three litre varieties of its home brand milk for $2.20 and $3.30 respectively.
According to the company, the extra 10 cents customers pay on each litre will be distributed in full to dairy farmers by processors in line with the usual payment cycles.
But Toothdale dairy farmer Phil Ryan estimated overall this extra 10 cents per litre was only going to equal about two to three cents at the farm gate for the approximately 450 farmers that supplied Woolworths with milk.
He said farmers supplied milk to multiple brands owned by Woolworths.
“It’s only putting 10 cents a litre on those two and three litre bottles of home branded milk,” he said.
“But that will only be a small proportion of what those farms produce.
“So overall it’s going to be about two to three cents per litre.”
In a statement released to the Bega District News on Tuesday, Bega Cheese said it was good to see the price of retailers milk increase and the benefit flow to farmers in recognition of the costs and challenges of dairy farming.
However, the company said the move only assisted those farmers supplying Woolworths and therefore did not flow to farmers in the Bega Valley or other Australian farmers whose milk went into cheese and other dairy products sold within the country and overseas.
“It is a good first step in recognising the need for increased prices for dairy products and hopefully we will see improvement in pricing for all dairy products in the not too distant future,” the statement read.
It is a good first step in recognising the need for increased prices for dairy products and hopefully we will see improvement in pricing for all dairy products in the not too distant future.Bega Cheese
A spokesperson for Woolworths said every cent of the price increase would be passed on to the dairy farmers supplying milk into its home branded milk, which would benefit over 450 Australian dairy farmers.
“We don’t buy this milk directly from farmers. We pass on the extra 10 cents paid per litre to our fresh milk suppliers who source the milk from Australian dairy farmers directly,” the spokesperson said.
“Our Woolworths branded fresh milk suppliers then distribute the extra money to Australian dairy farmers supplying Woolworths branded fresh milk.
“The fresh milk suppliers will continue to provide us with independently audited reports on a monthly basis to verify the extra funds are being distributed to Australian dairy farmers in full.”
Jellat Jellat dairy farmer Rob Russell said he remained “pretty cynical” about the model.
“It’s only going to benefit 450 farmers or so, and good luck to them,” he said.
“But there’s something like 6000 dairy farmers in Australia.
“I think Woolworths is probably getting more publicity than they’re contributing back to the industry.”
Mr Ryan said in order to bring meaningful benefits to the dairy industry, supermarkets needed to increase their prices on all dairy products.
“Woolworths is still selling $6.90kg blocks of cheddar which is equivalent to 69cents per litre of raw materials. That’s a lower presentation of value than one dollar milk ever was,” he said.
But he said the new price increase was a “psychological win”, as it removed the perception milk was not worth much money.
NSW Farmers’ Association congratulated Woolworths for the move and called on Coles and Aldi to follow its lead and end the sale of $1 a litre milk.