Queensland senator calls Coles and Woolworths to account on milk pricing

DAIRY: Calls for supermarkets to stand up for the future of the dairy industry.
DAIRY: Calls for supermarkets to stand up for the future of the dairy industry.

THE big two supermarkets could have some explaining to do after North Queensland-based senator, Susan McDonald called for representatives of Coles, Woolworths to face a public hearing in Canberra to explain why they pay Queensland farmers less for their milk than what it costs to produce.

Senator McDonald made the request today after writing to the heads of the big two supermarkets, asking them to start paying farmers a fair price.

A Woolworths spokesperson said the company had not received a request or invitation to attend a hearing.

"We will wait to receive a request, with the relevant terms of reference as well as a date and time, before determining if we're in a position to attend," he said.

"Woolworths did meet with the Senator earlier this week to outline its position on dairy and detail the measures put in place to support those affected by drought."

The spokesman said questions about pricing were best directed to the dairy processors who negotiated farmgate prices with dairy farmers independent of retail prices.

"We've been taking steps to support a more sustainable dairy industry while the Federal government works to deliver the evidence-based structural reform the ACCC recommended following its 18-month inquiry," he said.

"Since September 2018, our drought levy has contributed an extra $29m in relief to more than 450 Australian dairy farmers.

"On top of the levy, we have also agreed to wholesale cost increases from milk processors across the dairy cabinet in response to rising farmgate prices."

Coles was also contacted for comment but did not respond by deadline.

Scenic Rim dairy farmer Kay Tommerup agreed with supermarkets being called to account and said the problems faced by dairy farmers stemmed from the industry being undervalued.

"I get annoyed when I see signs on the cash registers in Coles asking customers to 'donate' to farmers," she said.

"We are not charity cases, all we want is to be paid a fair price for our product.

"The drought hasn't caused the problems we're having, it has exacerbated the real cause, which is the undervaluing of the industry by supermarkets.

"I think they saw us as an easy target to make themselves look good and now everyone expects to pay less because they put such a low value on milk."

Queensland Dairyfarmers' Organisation president Brian Tessman said QDO supported the senator's efforts.

"It's great to see Senator McDonald and the LNP taking such an active role in sorting out the dairy industry," he said.

"While we were able to get $1/L milk removed from supermarket shelves earlier this year, that was not, and should never have been thought to be the end of it all.

"Retailers have slipped through the net in being held accountable through the Mandatory Code of Conduct.

"They have a commercial and ethical responsibility to their suppliers and customers, to ensure fresh milk can be produced in Australia for years to come."

Senator McDonald said the Morrison government was currently finalising a Dairy Code of Conduct that aimed to protect dairy farmers from unscrupulous supply agreements that locked farmers into selling milk for less than it costs to produce, but she urged the supermarkets to pre-empt the code and lift their prices.

After meeting with dairy farmers from southern and northern Queensland and speaking to the ACCC about barriers to imposing a government-legislated floor price for milk, Senator McDonald said supermarket giants needed to "find a moral backbone".

"While farmers have been publicly suffering, the silence from Coles and Woolworths has been deafening," she said.

"These supermarkets constantly advertise how virtuous they are by sourcing ethical coffee, dolphin-free tuna and RSPCA-approved chickens, but the farmers and the Australian public deserve to know what ethical standards are being applied when Queensland's dairy industry is being pushed to the wall by shameful buying practices.