The Coles supermarket chain is launching a consumer-driven milk fund to help Victorian and NSW dairy farmers affected by a sudden drop in milk payments.
The fund is similar to an initiative Coles launched with South Australian farmers in 2012.
The supermarket will establish a new milk brand that will pay 20 cents a litre to an independent fund, aimed at supporting the 2,600 Murray Goulburn dairy farmers affected by last month’s price cut.
But it will take two to three months to get the new brand on sale, and the money raised will be targeted to the long-term future of the sector.
Dairy farmers in Victoria meanwhile face an immediate crisis, after Australia’s largest dairy processor Murray Goulburn announced it would retrospectively cut the price it was paying farmers this season, wiping out two years’ profits for some suppliers.
Fund outcomes for South Australian farmers
Since Coles launched their consumer-driven milk brand with South Australian farmers four years ago — SADA Fresh milks — the retailer has raised about $200,000 a year for farmers.
SA Dairy Industry Fund’s executive officer Ken Lyons said the money was used for on-farm work such as pasture research, and to develop new markets, such as fresh milk sales into China.
“The fund will be investing in projects that will help all dairy farmers,” Mr Lyons said.
“As examples the three new processors that are coming into South Australia are the Beston Group in Murray Bridge, the Midfield group at Penola and the Chinese investment down at Tantanoola — they’re all seeking milk supply.
“That is going to benefit all dairy farmers, by improving the farm gate milk price.
“I think if this takes off in Victoria, it will be a win-win for the industry.”
Council of Small Business sceptical
Peter Strong from the Council of Small Business said the new Victorian consumer-driven fund was only needed because of what the large retailers had done to the industry in the first place.
“This is such hypocrisy and it’s not costing them any money at all,” he said.
“It’s going to cost their customers money, and to pretend to be doing something good, when it’s not costing them any money at all.
“The fact they’re not making any money out of it, is neither here nor there because they didn’t anyway.”
He acknowledged this situation was created by Murray Goulburn not dropping its price early enough, and the global price has collapsed.
“In Australia the fragility of the sector has come from Coles and Woolworths and what they’ve done to the sector,” Mr Strong said.
Meanwhile, Murray Goulburn is facing a class action in the Supreme Court of Victoria, from shareholders who argue the company engaged in misleading and deceptive conduct in statements when it listed on the stock exchange last year.
The company strongly denies any wrongdoing and will be vigorously defending the claim.