Revealed: What milk should really cost in Australia today
Milk prices in Australia are sitting $1.50 below natural inflation rates, as farmers reveal the true cost of supermarkets' decade-old pricing war.
Natural inflation on generic milk is still being thwarted by the supermarkets’ dollar-a-litre promotion, dairy farmers say, with the aftershocks of the controversial loss leader still reverberating.
If 1970s prices for milk had followed natural inflation over the past half century, Australian shoppers would be paying upwards of $3.50 per litre for milk, retail data indicates.
With 1990s and 2000s mechanisation bringing down the cost of production a quarter-century ago, inflation data suggests generic milk would be priced between $2.56 and $2.95 a litre without the dollar-a-litre promotion, introduced by Aldi, Coles and Woolworths 15 years ago.
Gippsland farmer Chris Griffin was president of the Australian Dairy Farmers group at the time of the dollar-a-litre launch back in January 2011.
Despite Australia’s big three supermarkets gently rising prices from 2019 off the $1 base, Mr Griffin said the controversial promotion still distorted customer expectations.
“If dollar a litre had never happened, of course prices for milk would be far more sustainable than they currently are,” the Westbury-based farmer said.
“A realistic price would be above $2 a litre. Everyone along the supply chain has got to make some profit — from the farmer producing the raw product, the processors and then the retailer.”
Last month, The Weekly Times revealed Australia was the only nation in the industrialised world to pay less than $A2 a litre for milk.
In New Zealand, Kiwi shoppers are charged $NZ3 ($A2.64) for a litre of Woolworths NZ milk while arch rival New World charges $NZ2.99 ($A2.63).
eastAUSmilk president Joe Bradley said all three supermarkets needed to raise prices above $2 and pass on the gains to farmers.
“Dollar-a-litre milk has distorted prices long after it’s stopped being $1, it has really set back dairy farming in this country,” he said.
“Every other item on the supermarket shelves has risen with inflation but milk is expected to magically appear in the fridge at stupidly low prices. It doesn’t make economic sense and it needs to end.”
A Coles spokeswoman said the supermarket introduced a direct sourcing model for its own brand milk in 2019 and extended the model to cheese in 2021, “to ensure we could provide competitive and guaranteed farmgate prices to dairy farmers directly”.
“Coles is proud to support the Australian dairy industry through ongoing investment, which in turn helps deliver quality Own Brand dairy products to customers across the country,” she said.
“Through longer-term one, two or three-year contracts, farmers are offered greater security of income so that they can invest back into their farms and make them more sustainable.”
An Aldi spokesman said the supermarket would “continue to work with our supply partners to review pricing across the dairy category as required”.
Woolworths was contacted by The Weekly Times for comment.
INFLATION BY THE LITRE
How much Australians paid for a litre of milk by year and the 2025 price adjusted for inflation, according to the Reserve Bank formula
1970: 22c = $3.12
1975: 43c = $3.74
1980: 65c = $3.42
1985: 80c = $2.83
1990: 90c = $2.90
1995: $1.20 = $2.56
2000: $1.50 = $2.95
2005: $1.60 = $2.67
2010: $1.40 = $2.02
2015: $1.00 = $1.29
2020: $1.30 = $1.60
2025: $1.65 = $1.65
