Furious farmers speak out over supermarket pricing fight

Action taken against Woolworths and Coles by the consumer watchdog has triggered a fierce response by farmers supplying the big chains.

Furious farmers say they are just as big losers as customers in the wake of skyrocketing prices hitting selves at the major supermarkets.

Agriculture peak bodies have fired a salvo of criticism in the wake of Monday’s announcement by the consumer watchdog that it would take legal action against Woolworths and Coles over alleged misleading pricing tactics.

On the same day that was announced, Woolworths shaved 5 cents a litre off the cost of home brand milk – with Australian Dairy Farmers (ADF) saying the savings won’t be paid out to the industry.

The peak body added that prices paid to farmers dropped 10-15 per cent at the start of the 2024-25 milk supply season, amid predictions from Australia’s agriculture department which expects the value of milk production to fall by 10 per cent to $5.5 billion this financial year.

Likewise, in horticulture, the sector is grappling with a 20 per cent increase in the cost of production, according to National Farmers’ Federation Horticulture Council executive officer Richard Shannon.

“Global supply chains are still being affected by Covid, but also the war in Ukraine has an impact on fertiliser costs, and other input costs (with) growers getting squeezed in the middle,” he said.

Shoppers queue at Woolworths in St Marys. Picture: Max Mason Hubers

“It’s not sustainable, growers have been getting squeezed for a long time … we’ve had a significant period of inflation, and supermarkets haven’t reacted by responding to price increase requests.”

Mr Shannon said the action by the consumer watchdog, the ACCC, against the two big supermarkets “lays bare culturally the attitude the supermarkets have”.

“(Store prices) don’t necessarily transfer or relate to the prices paid to their suppliers – it shows their attitudes dealing with consumers but also suppliers,” he said.

Australian Dairy Farmers president Ben Bennett, a dairy farmer from Pomborneit in southwest Victoria, said the competition watchdog’s pursuit of pricing tactics used by the big two supermarkets “is a clear signal that the big supermarkets have too much power in the Australian market.

“They’re posting big profits while dairy farmers are being squeezed out of business,” he said.

Dairy Farmer Phil Ryan from Toothdale, near Bega in NSW. Picture: David Rogers

“While consumers may pay more at the checkout for dairy products, very little flows back through the processors to dairy farmers.”

Phil Ryan, a fifth-generation dairy farmer at Bega who supplies milk for cheese, said increased electricity, wages and fuel prices had resulted in his production costs soaring, while he had taken a 10 to 20 per cent to his sales prices.

“We’ve been hit from both sides,” he said.

“I reckon in 2007 when my family bought this farm, there would have been something resembling over 100 dairy farms in the Bega Valley and now there’s 45 left.”

“Sometimes it’s a real kick in the guts – in particular I’ll follow the price of cheese in the supermarket – you see a price go up, you think ‘you beauty’, and a few weeks later you’ll see this big advertising of ‘Down Down’ or ‘Prices Dropped’ – and you’re hoping we’ll get a fair price for it.”

Coles and Woolworths this week were placed squarely in the spotlights of the consumer watchdog, over the big twos’ pricing practices. Picture: NCA NewsWire

A Woolworths spokeswoman said the lower shelf price for milk follows recent reductions in the market prices for the product, with Woolworths passing on this saving from its supply chain directly to customers.

“We pay our fruit and veg suppliers the market price for their produce, which varies due to weather, seasonality, supply and demand,” she said.

“We’ve reduced the price of Woolworths branded milk to pass on the savings we’re receiving from our milk suppliers.“

A Coles spokeswoman said the supermarket had locked in a longer-term model in 2019 with one, two or three-year contracts for dairy farmers, which it said offered greater security of income.

In response to the ACCC’s action earlier this week, Coles said it would defend itself in proceedings, saying the allegations “relate to a period of significant cost inflation when Coles was receiving a large number of cost price increase from our suppliers”.

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Originally published as Furious farmers speak out over supermarket pricing fight