The Queensland Dairyfarmers’ Organisation (QDO) says Wesfarmers' massive increased profit result announced recently is stained by the disastrous impacts of the Coles-led retail milk price war on dairy farming families, particularly in Queensland.
Wesfarmers is the owner of Coles, which triggered the milk price war on Australia Day 2011 by cutting retail store-brand milk to $1 per litre. Wesfarmers has announced a $2 billion profit, with Coles’ profit bulging by 16pc to $1.36b.
QDO president Brian Tessmann said dairy farmers were paying the price.
“Farmgate milk prices have been sent ‘down, down’ since the milk war began, and are at absolutely unsustainable levels," Mr Tessmann said.
"The reality is that $1 a litre for milk is not fair and not sustainable. The last time milk was $1/litre was in 1992.
“Nearly half of dairy farming families in Queensland have already seen their incomes drop by an average of about $40,000 this year, and the others are under further downward price pressure after already seeing their incomes devastated the previous year.
"Queensland has lost 40 dairy farming families over the last 18 months since the Coles-led milk price war started.”
Mr Tessmann said the industry was sick of seeing supermarkets using discounted milk as a marketing gimmick to attract shoppers and grow their own market share of the store brand at the detriment of mainstream milk brands.
“There were serious questions asked at recent Senate inquiries about milk being a ‘loss leader’ marketing gimmick which attracts shoppers in the door in order to make profits on other items, while at the same time seeking to grow market power at the detriment of others.
“Coles are refusing to acknowledge the impact of their action on farmers, and continue with corporate spin that they are absorbing the price cut.
“Coles is wrong. The impact is real and it is happening right now. The bulging profit result hardly seems to be the story of a supermarket that has the best interests of shoppers and suppliers in mind.
“Where will the smiling executives of Wesfarmers be when the shoppers of Queensland go the dairy cabinet and find that it contains no fresh Queensland milk, because the milk war is sending them out of business?
“The shareholders of Wesfarmers’ need to understand that it (the dividend) has come to them at an awful cost.
"To help their conscience they should use the dividend to purchase branded milk.
“The message to consumers is: don’t buy $1 per litre milk which priced below its real worth.
"Branded milk products ... represent a more sustainable price and help support the entire value chain.”
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