Dairy farmers plead for code

Brad ThompsonThe West Australian
Boyanup dairy farmer Phil Depiazzi.
Camera IconBoyanup dairy farmer Phil Depiazzi. Credit: Rueben Hale/The Countryman.

WA dairy farmers have marked the fourth anniversary of Coles introducing $1-a-litre milk by calling for a mandatory code of conduct for retailers, including a supermarket ombudsman, to protect suppliers.

The WAFarmers dairy section said only a mandatory code backed by an ombudsman would balance the "excessive power of major retailers over suppliers" to ensure a fair and competitive market.

President Phil Depiazzi said the $1-a-litre milk pricing policy of the supermarket giants was a huge burden on local dairy farmers and a major barrier to investment in the industry.

Mr Depiazzi said farmers were as frustrated and upset with the pricing policy as ever despite Coles joining forces with WAFarmers late last year to launch a branded milk product that sells for $1.50-a-litre.

He said farmers had mixed feeling about the deal, which sees WAFarmers get 20¢ in royalties from every litre sold at Coles.

The WAFarmers dairy section and national body Australian Dairy Farmers estimate $1-a-litre milk has sucked about $100 million out of the WA supply chain since it was introduced by Coles on Australia Day in 2011.

Mr Depiazzi said the move, dropping the price of milk to less than bottled water, devalued milk in the minds of consumers.

It ignited a milk price war with Woolworths and other big retailers, who matched the price on home brand products despite calling it unsustainable.

"They (supermarkets) are selling milk at below cost in WA towns," Mr Depiazzi said.

"We again urge consumers to be aware of what is going on and support local farmers by buying branded milk so we can continue to produce top quality milk and to back investment in the future of dairy in WA."

The WA dairy section and Australian Dairy Farmers said recent Australian Competition and Consumer Commission charges and investigations into Coles and Woolworths highlighted the need to protect suppliers with a mandatory code and ombudsman.

The ACCC charged Coles with unconscionable conduct toward some suppliers and then launched an investigation into Woolworths.

Last month, the competition regulator and Coles notified the Federal Court they had reached a settlement. The Wesfarmers-owned supermarket chain copped $10 million in penalties and apologised for mistreating some suppliers.

"The admission must serve as a red flag to the Federal Government that the draft voluntary code of conduct that retailers are advocating is not strong enough," the farm lobby groups said.

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