Loss-leader milk not good for industry image

Loss-leader milk not good for industry image


Dairy
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Hunt questions value in mandatory code

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SA DAIRYFARMERS’ Association president John Hunt has welcomed the Australian Competition & Consumer Commission inquiry into the dairy industry, saying the results showed it had taken the time to listen to farmers.

But he was cautious of talk about a mandatory code of conduct.

In June, the Australian Dairy Industry Council launched a code of practice for contractual agreements between suppliers and processors, with support from each state’s dairyfarming lobby group, including SADA, and nine major processors. It is due for a review midway through next year.

“With a voluntary code, it includes people who want to sit down in a room and talk but with a mandatory code, they will go by the letter of the law,” he said.

Mr Hunt said he had also hoped to see more input from retailers, which were dictating prices.

While the ACCC found that farmers were not receiving less money for $1 a litre milk through the major supermarkets, Mr Hunt said it was still a problem for the industry.

“The perception of selling milk as a loss-leader really hurts us,” he said.

“We need to be seen as a higher value product and (instead) you can buy milk for cheaper than water.”

Mr Hunt said one way producers could react to this was in their choice of processors.

He said the issue was not just in the cheap milk but in other dairy products in supermarkets.

“If there is $7.50 a kilogram cheese, and 10L of milk has gone into that cheese, then that is 75 cents a litre for milk,” he said.

“It’s not just one product, it’s right across the board.”

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