If the sale proceeds, ADF wants Coles to guarantee that all existing Saputo farmers supplying milk to the processing plants will be offered milk supply agreements with either Coles or another party over the long-term.
Australian Dairy Farmers (ADF) notes the Coles’ plans to acquire Saputo milk processing plants at Laverton in Melbourne and Erskine Park in NSW with keen interest and caution.
The proposed investment by Coles can be seen as a vote of confidence in the future of dairy, however it can also be viewed as a move by a major retailer to secure milk when supply is declining.
While Coles has offered competitive prices at the farmgate since it started sourcing milk direct from farmers in 2019, it also introduced cheap $1 per litre milk to the retail sector in 2011. ADF considers increased competition and price transparency by both retailers and processors is key to a competitive market.
The real issue is the market power and control that will result with Coles being a processor in their own right and the ability for Coles to set the retail price of their competitor brands in all Coles Supermarkets, it means total control of every fresh milk price within the Coles sphere of influence
ADF is concerned that greater concentration of market power could impede competition or price transparency along the supply chain from farm gate all the way to the retail customer. ADF does not wish to see this disadvantage farmers in the long-term. The dairy industry needs strong competition.
If the sale proceeds, ADF wants Coles to guarantee that all existing Saputo farmers supplying milk to the processing plants will be offered milk supply agreements with either Coles or another party over the long-term. It does not want to see contracts restricted to Coles’ suppliers.
ADF notes that the proposed purchase is subject to clearance by the Australian Competition and Consumer Commission (ACCC) and it will seek input into the ACCC’s review of the deal.
-ADF