Dairy leader calls for Woolworths, Coles and Aldi to raise milk prices

Rising labour costs and fuel prices nationwide will need to flow onto the supermarket checkout, one dairy executive says.

Australian shoppers will need to pay two dollars a litre for generic milk in order to keep farms viable, a dairy leader says.

eastAUSdairy vice chairman Graham Forbes said two dollars a litre was still lower than most industrialised countries and below prices set for soft drink and bottled water.

He said historically low prices for milk - a hangover from the dollar-a-litre 2010s — were unsustainable.

“Two dollars a litre for milk is still very cheap. You pay more per litre for soft drink or sparkling water,” Mr Forbes said.

“Throughout the dollar-a-litre years, we were always were pretty reasonable. We’d say $1.40 a litre or $1.50 a litre was about where the price needed to be.

“But the economy has shifted in the past few months. Inflation is running and the dairy industry needs to keep up, otherwise you’re producing milk for hardly any return.

“Labour costs are high due to worker shortages. Fuel, as we all know, is far more expensive than it was at the start of the year. Two dollars a litre for generic milk is still reasonable in the bigger scheme of things.”

The dollar-a-litre milk push was introduced by Coles and Woolworths in January 2011 and lasted eight years until it rose incrementally to $1.10 a litre.

Along with Aldi, Australia’s big three supermarkets quietly increased the price of generic milk to $1.30 just prior to Christmas, although fuel costs have skyrocketed since that time.

A Coles spokeswoman said the supermarket had: “moved to source Coles Brand milk via a direct sourcing model in some regions and therefore, we are able to pay farmers directly in those regions.

“We believe this model delivers fair and competitive prices to farmers, provides greater certainty of income, and allows farmers to more confidently plan for their future,” she said.

A Woolworths spokeswoman said: “We offer our customers a wide range of milk at different prices to suit household budgets and we are particularly mindful of cost of living pressures for Australian families.

“As a result of increasing farmgate price movements, we’ve accepted millions of dollars in wholesale cost increases from our processors in recent years.”

Both Coles and Woolworths pointed to their dairy funding initatives which has provided more than $5 million and $2 million in farm grants respectively.

Aldi did not respond to The Weekly Times request for comment.

The call for milk prices to rise at the checkout is not contained to Australia.

Last week, the head of the UK’s largest dairy company called for British shoppers to pay more for liquid milk.

Arla Foods UK managing director Ash Amirahmadi said UK shoppers were paying less for milk in real terms than they were a decade ago.

“(Raising the price of milk is) even more critical by the fact that the costs of producing milk are increasing like never before,” he said.