Coles milks marketing campaign for millions, farms suffer
DAIRY farmers will receive more than $5 million from Coles after an investigation found the supermarket giant failed to pass on profits.
It’s a massive financial relief to the 194 Norco producers who have been consistently losing money to the rising cost of drought and feed, according to Junabee dairy farmer and Norco director Heath Hoffman.
“It’s come as a bit of a surprise but the timing is really good because our farmers are struggling,” Mr Hoffman said.
“People are putting more than they’re earning back into feeding the cows – so many are in a negative financial position.
“They need income to secure fodder for the next few months and get through this tough time.”
The payments come after an Australian Competition and Consumer Commission investigation found Coles reduced its payments to Norco farmers from the sale of its Coles brand milk.
Marketing campaigns claimed to deliver 10c a litre to farmers, but in reality this only occurred for two weeks.
After the two-week period Coles quietly reduced the amount to less than 4c a litre.
Australian Competition and Consumer Commission chair Rod Sims said the failure was an “egregious breach of consumer law”.
“It’s insanity,” Mr Hoffman said.
“Farmers are subsidising the price of milk on shelves and they can’t wear that cost.”
The drought caused feed costs to rise dramatically and Mr Hoffman said major retailers would need to pass on closer to 80c a litre to make the industry profitable again.
“We need to get in the position where feed costs are covered by milk prices,” Mr Hoffman said.
“It’s been a decline in profits over a number of years but the drought has exacerbated the whole thing.
“We need a solution to move forward and sustain the industry.”
One such solution could be an increase in cost to consumers.
“Rising prices would help because the whole product is grossly undervalued,” Mr Hoffman said.
“Just compare the product to the price of water, for example.”
Coles falsely marketed the April milk price increase of 6.5c a litre as a way of assisting farmers through drought.
The ACCC said Coles would pass on the lost $5.25 million to Norco within seven days, in addition to paying an additional 7 cents per litre for its Coles branded bottles of milk until June 2020.
It is not known how much of the $5.25 million each dairy farm is set to receive.