Struggling Scenic Rim dairy farmers are rejoicing after the belated decision by Coles and Aldi to increase the cost of milk by 10c/litre.
While the industry celebrated when Woolworths first announced the removal of $1 milk from its shelves, producers could not claim success until Coles, Australia's second largest supermarket in terms of share, also agreed. That Aldi has followed is no surprise.
Bromelton dairy farmer Mark Platell said those within the industry had been waiting a long time for the supermarkets to concede and it was better late than never.
As a result of the move, a farmer contributing 100,000 litres per month to Woolworths, Coles or Aldi should be receiving an extra $10,000 a month. Money which will allow them to feed stock, maintain and update equipment, pay for water and irrigation and put food on the table for their families.
But Mr Platell said farmers were only actually receiving about five cents extra per litre because the 10 cent charge was not applied to every litre produced.
"The 10 cents is only added to litres that go into particular packs," he said.
"Yoghurts and custards haven't gone up.
"We are hopeful we might get five or six cents per litre, but we certainly appreciate it."
He said he hoped the additional money would allow farmers to get back into the black financially and prevent some from leaving the industry.
"It is sad to see really good young farmers going out through lack of income," he said.
He said the price of other dairy products also needed to be increased and the changes would need to be permanent or the industry would be back in the same position.
A delighted Queensland Dairyfarmers' Organisation president Brian Tessman said $1 milk was dead and gone and it was time to move on.
He said a 10-cent increase was never the end goal and was nowhere near enough.
"They have recognised that a fixed base price for milk was unsustainable and it is great that Coles appears keen to play a role in helping to move the Australian dairy industry forward," he said.
"While all dairy farmers appreciate the goodwill of the Australian public in response to the drought, at the end of the day we can't survive on charity and don't want to.
"We simply want to get on with business and make sure that we can continue to provide Australians with fresh dairy produce."
He said the QDO was looking forward to working closely with all retailers, processors and government to address the larger systemic issues within the dairy industry.
"Finding and implementing long term, sustainable structural reforms is our next goal," he said.
"Getting there will need to be a concerted effort by all parties."
Wright MP Scott Buchholz said the action by the three retailers vindicated the eight years of work by so many to bring an end to $1/ litre milk but the situation was still unsustainable for farmers in the long-term.
"I thank everyone who has played a role in this decision, be it the Government through the introduction of a Mandatory Code of Conduct, farmers participating in protests recently, or the silent protest by the mums and dads in my region who boycotted Coles and Aldi in support of our local farmers," he said.
"While we welcome this decision of the 10c/ litre increase, only about 3c/ litre will make its way through to the farmers and this is still unsustainable for farmers in the long term. I encourage the retailers and the processors to keep this in mind during the next round of negotiations.
"My heart goes out to those farmers who this good news will be too late for, like those who have already left the industry due to the dogmatic price structure which doesn't keep in line with the increasing cost of production."
Mr Tessman said the support of key political leaders including Agricultural Minister David Littleproud, Llew O'Brien and Matt Canavan had been instrumental and would be imperative to moving the industry forward.
The battle to end $1 milk had been waged by various state and national dairy industry bodies since it was introduced just over eight years ago. Until now, it had been easy for supermarkets to ignore the noise and whinging.
In a statement last night a Coles spokesman said as an interim measure the supermarket would increase the price of two litres of Coles Brand milk to $2.20 and three litres of Coles Brand milk to $3.30 in most Coles stores from this morning, with the new pricing to be rolled out across all stores in coming days.
He said Coles would work with dairy processors to ensure that the benefit of this retail price increase went directly to the dairy farmers who supplied Coles Brand milk to customers.
"Coles sources 100 per cent of our Coles Brand fresh milk from Australian farmers, many of whom are struggling as the impact of drought compounds ongoing challenges in the dairy industry," Coles Group chief executive Steven Cain said.
"Coles supports proposals to make Australia's dairy industry more sustainable, and we are continuing to explore long-term solutions with government and industry stakeholders.
"However we know that many dairy farmers cannot wait for structural reform to be delivered so we are moving to provide relief right now."
Managing director of buying, ALDI Australia Oliver Bongardt said the supermarket chain would increase the price of two litre and three litre Farmdale fresh milk by 20 cents and 30 cents respectively, with these additional proceeds being passed on to dairy farmers in full.
He said the decision to increase fresh milk prices had been reached in recognition of the significant issues currently impacting the dairy industry and the fact that broader government-led policy reform is unlikely to occur in the short-term.
"ALDI has already taken substantial action over recent months aimed at addressing issues confronting the Australian dairy sector," he said.
"This has involved us accepting cost increases from our milk processors to cater for drought and associated issues, and we have been able to do so until now without passing higher prices on to the consumer."
He said the announcement of the price movement reflected constructive discussions with milk processors who have worked with ALDI to find a way to pass on the additional proceeds, in full, to the dairy farmers supplying them with fresh milk.
"This solution is a short-term measure and will allow our processors to immediately pass additional funds to their dairy farmers outside of normal seasonal adjustments. At the conclusion of the current season*, ALDI will work with processors to ensure that prices for milk reflect the current market conditions and support the long-term viability of the dairy industry."
Both ALDI and Coles acknowledged the need for government-orchestrated structural reform of the industry.
- The Australian dairy season runs from July until June.
