This comes after milk processor Saputo flagged it would seek to scrap the controversial one dollar per litre supermarket milk, once contracts with retailers expired.
The United Dairyfarmers of Victoria has long urged an end to retailers’ race-to-the-bottom tactics of selling milk and cheese below market prices to Australian consumers, which devalues dairy products.
“Farmers are sick of seeing discounted private label dairy products on supermarket shelves, so it’s great to see a processor showing leadership by starting these conversations,” UDV President Adam Jenkins said.
“When retailers compete to sell the cheapest products, the supply chain pushes the price cuts right back to the farmer, who then misses out on receiving a fair price.”
Mr Jenkins said the practice still harmed the state’s dairy industry by reducing the value of liquid milk sold throughout the retail sector, which now extends to a broader range of dairy products, including cheese.
“This reduction in retail value has undermined the public perception of the worth of dairy products, weakening the margin being paid back to milk processors, who are forced to pass these losses on to their farmers,” Mr Jenkins said.
While one dollar per litre milk has become the focus of the fight against discount dairy products, other discounted private label products such as cheese return even worse margins to the processors and farmers.
“Farmers need to be paid a fair price for their product. It’s time for processors to demonstrate leadership and back the calls to end the loss-leader strategy of the retailers.”