Coles, the supermarket chain that kicked off the cut-price milk war that has effectively lowered the price to $1 a litre, will begin selling a new brand in Victoria this week it says will help struggling dairy farmers.
A portion of the sales of the new Farmers Fund milk brand will be given to a fund for dairy farmers administered by the Victorian Farmers Federation.
But before you rush to the cooler shelf to buy the new Farmers Fund milk over other brands, consider this.
Coles’ private label milk is produced for the supermarket by Murray Goulburn, while the new Farmers Fund milk will be produced under licence by Coles and Murray Goulburn.
Coles private label milk sells for $2 per two-litre container, while the Farmers Fund milk will sell for $2.50 per two-litre container, with 40 cents going to the Farmers Fund.
This means that Coles will be selling the same Murray Goulburn milk under a different brand for 50 cents more, with just 40 cents to the farmers.
When asked about this seeming discrepancy in pricing, a Coles spokesperson said the additional 10 cents charged per litre “will be used to cover costs, including administration costs incurred by VFF in setting up the fund and operating it”.
Effectively, consumers are being asked to donate 40 cents to the VFF fund, as well as 10 cents in administration costs, for the same private label milk that has been blamed for helping lower milk prices for dairy farmers.
The VFF Farmers Fund – which Coles kickstarted with a $1 million contribution from its Nurture Fund – is undeniably a worthy cause, but it does nothing to address the $1 per litre supermarket trend that has lowered milk prices for farmers.
After dairy co-operative Murray Goulburn retrospectively lowered its milk prices to farmers, and rival Fonterra followed suit, an increasing number of shoppers have sought out branded milk in protest against supermarket private labels.
Dairy Australia trade and industry strategy group manager Charlie McElhone told AAP these consumer-led boycotts have hit Coles and Woolworths, with their private labels’ market share dropping from 65 per cent to around 50 per cent.
VFF president David Jochinke said private label milk still holds a significant share of the market and hopefully the new Farmers Fund milk could claw some of that back to farmers.
“We’re encouraging anyone who is buying home brand milk to consider investing in this fund,” Mr Jochinke told the ABC.
“We think supporting branded milk is a good thing, but for people buying home brand milk, this is an opportunity to get them involved.”
VFF chief executive Graeme Ford did his best to promote the Farmers Fund milk, while also supporting the purchase of branded milk, on Network Ten’s The Project on Wednesday night.
Watch it here:
Shouldn't they just buy the milk at a sustainable price? @theprojecttv
— Radiothon Jim (@creativemercury) September 7, 2016
@theprojecttv It seems to be just adding an extra level of nonsense between the farmers and their rightful money.
— Damo Hatcher (@thepingmachine) September 7, 2016
Farmers from southeastern Australia can apply to the Farmers Fund for $20,000 for on-farm work including upgrades, consultants or plans to increase productivity.
The first round of applications closes on September 30.
After Murray Goulburn cut the amount it paid farmers for their milk, many were left to pay back the difference to the company.
The company cut the price after its predictions the milk market would recover from a global glut failed to materialise.
Its predicted price paid to farmers of $6.05 per kilogram in July 2015 fell to between $4.75-$5.00 a kilogram in April 2016.