West Australian dairy farmers ‘will not be hurt’ by Brownes redundancies: CEO

WA’s biggest dairy processor Brownes has no plans to cut farmers’ milk contracts after announcing a number of redundancies this week, with its chief executive claiming the move was intended to “protect farmers”.

Brownes confirmed on Monday that staff had been laid off at its Balcatta processing facility in response to cost-cutting by consumers.

CEO Natalie Sarich-Dayton would not say how many workers had been made redundant, but insisted the move would not impact dairy farmers and no contracts would be sacrificed.

“One hundred per cent not . . . there’s definitely no repercussions with our farmers, and if anything, this is about protecting farmers and their work,” she told Countryman.

“Just like all businesses, when you can’t extract the value you need from the marketplace because of the rising cost of increases, we have to look elsewhere, and internal costs are an important place that businesses in these times need to manage.”

Ms Sarich-Dayton said cost-of-living pressures meant fewer West Australians were buying branded milk than 12 months ago, as supermarkets continued to offer cheaper home brand options.

The Reserve Bank of Australia’s decision to raise interest rates yet again on November 7 would not help matters, she added.

“The immediate place where you will see that impact on shopper behaviours is the supermarket,” she said.

“The choices that they make in the supermarket is they will buy private label products, they’ll buy the cheapest products on the shelf, they’ll look for promotions, they will even downsize.

“What we’re seeing a lot of is consumers are shifting from two-litre bottles to one-litre bottles to make ends meet.”

Brownes sells its 2L brand milk for $4, while WA competitor Harvey Fresh charges $4.50 for the same amount.

But 2L of home brand milk costs just $3.30 at Coles, $3.10 at Woolworths and $3.09 at Aldi.

Ms Sarich-Dayton said it was too early to say whether the redundancies would lead the company to scale back its product range, but did not rule out doing so.

“That’s a process we still need to go through,” she said.

“It’s an obvious next step in terms of driving efficiencies and simplifying the business model . . . so we will absolutely look at our portfolio and look at what is driving wastage and low returns and focus on the priority skews which deliver better business results and better business return.”

WAFarmers dairy section president Ian Noakes was convinced farmers would not be hurt by the redundancies, but was concerned about the prospect of product lines being axed.

“Brownes cant afford to lose milk supply so they’ve had to rationalise, and they’ve done that in their factory,” he said.

“But I think all Brownes suppliers think it’s really good the way they are operating now and the way they’re treating their farmers — they are trying to do the right thing.”