Coles plans to bypass the processors and buy direct from Dairy Farmers
- By: "Farm Tender" News
- Regenerative Ag & Carbon Farming News
- Jun 05, 2019
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Dairy Connect today welcomed Coles Supermarkets’ announcement that it plans to deal directly with dairy farmers, side-stepping the processor in NSW and Victoria.
Farmer Group President Graham Forbes said “that while stakeholders had yet to have access to the fine print involved with the proposal, on face value, it provided a pathway to the future for the milk supply chain”.
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“Notionally, the proposal should deliver price-certainty for up to three years for dairy producers supplying Coles house brand milk,” he said.
“The new plan will have no impact on retail prices instore but it should address a number of complaints farmers have had about the existing system in which they supply dairy processors who then supply the supermarkets”.
“Coles is hopeful that, by collaborating directly with producers, it would strengthen the sustainability and long-term resilience of farmer suppliers.”
Dairy Connect CEO Shaughn Morgan said new longer-term contracts will provide greater scope for farmers to plan business growth strategies.
“Dairy producers can select one, two or three year contracts with Coles and this will preclude processors from arbitrarily setting shorter-term contract farm-gate prices”.
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Shaughn Morgan said Coles’ new sourcing model will provide price certainty for producers allowing stakeholders and governments get on with the critical job of industry restructuring.
“Coles had previously relied on its dairy processor to buy milk from farmers for its house brand milk. This meant that the processor has been setting the farm gate price and not the supermarket,” he said.
Dairy Connect also welcomed the establishment of the $1.9 million Coles Sustainable Dairy Development Group which will boost dairy R&D and supplement the great work of dairy scientists in NSW and Victoria.
The new investment will fund research into more sustainable farming, new technology adoption, more efficient use of pasture, feed and water and support for business and talent development.
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In concluding, Dairy Connect calls on the Federal Government to implement the Mandatory Code at the earliest opportunity to safeguard the interests of Aussie dairy farmers. However, Coles should ensure that its milk supply agreements comply with the Code and thus provide safety for dairy farmers.
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