A FIVE-CENT cut to generic milk prices by Woolworths has been rebuked by Australian Dairy Farmers, a cut that coincided with a damning report by the consumer watchdog.
Woolworths slashed the price of one litre generic milk from $1.60 to $1.55, two litre bottles from $3.10 to $3 and three-litre bottles from $4.50 to $4.35.
Coles swiftly matched their supermarket rival while Aldi retained $1.60 pricing at the time of publication.
The peak representative body for Australia’s dairy farmers said actions by the country’s big supermarkets are pushing the sector toward a devastating milk price war for the second time.
In 2011, Coles cut the price of its home brand milk to $1 per litre.
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Major supermarkets Woolworths and Aldi followed suit shortly afterwards, accelerating the dairy industry’s decline.
Thirteen years later, after the dairy sector had made a small recovery from the original price war, Woolworths has again cut the price of its home brand milk with a claim it’s “passing on savings from its processor”.
The big supermarkets claim the price reduction has been passed onto dairy farmers, however, farmers have not seen a return at the farmgate with any form of savings made when it comes to the bottom line.
Consequently, the price of milk on supermarket shelves is now at its lowest level since 2011.
Australian Dairy Farmers (ADF) is concerned a second milk price war is underway, coming at the expense of dairy farmers and processors.
ADF president Ben Bennett said the move by Woolworths and Coles would place deflationary pressure on the farmgate, which was already hovering around the cost of production.
He said it was troubling the price slash coincided with the Australian Competition and Consumer Commission’s interim report into supermarket behavior which alleged both major retailers had advertised “fake discounts”.
“These decisions are made without thinking about the broader industry implications for dairy farmers,” Mr Bennett said.
“The supermarkets hide behind comments saying ‘we pay our farmers well’ but ignore how a cut like this flows onto the wider industry at a time when dairy is in big, big trouble.”
