ACCC says dairies OK to sidestep processors and deal with Woolies

THE ACCC will allow seven NSW dairies to collectively bargain with Woolworths to supply milk for the retailer's Farmers Own brand.

THE Australian Competition and Consumer Commission has declared it will allow seven dairy farmers from Manning Valley in New South Wales to collectively bargain with Woolworths to purchase milk directly from them, allowing them to achieve higher prices than if they sold to processors.

Woolworths is planning a trial of a new milk brand, tentatively dubbed Farmers Own, which will funnel more funds to the seven farmers as part of a plan to counter negative perceptions around its dollar-per-litre milk.

Milk processor Parmalat, owner of the Pauls brand and already a supplier of private-label milk to Woolworths, will receive a fee for processing the farmers' brand rather than buying the milk and then selling it at a profit.

“Collective bargaining arrangements can result in public benefits through transaction cost savings, providing participants with better access to market information and by allowing small businesses to have greater input into contractual terms and conditions, leading to more efficient outcomes,” ACCC Chairman Rod Sims said.

Woolworths rival Coles last week unveiled a 10-year supply deal with milk processing co-operative Murray Goulburn, under which the farmers who own the co-op will receive an above-market price for their milk.

Both supermarket chains have sought to address ongoing concerns that their ever-decreasing prices are hurting farmers and food manufacturers, with dairy farmers saying they are being pushed towards bankruptcy by unsustainably low pricing.