increase font size
Australian supermarket giant Coles is directly buying milk from farmers at a higher price than offered by processors like Fonterra.
The battle for milk in Australia has just got tougher for processors like Fonterra.
Giant food retailer Coles is chasing more direct suppliers and ramping up the pressure on milk processors by announcing three-year minimum price contracts to secure the supply.
Australian media reports say Coles will pay farmers a full season price of about A$7.19/kgMS, which puts them ahead of most processors, including Fonterra.
Fonterra, which collects and processes milk in Victoria and Tasmania, recently came out with an opening price of A$6.55/kgMS.
In Australia, milk supply agreements for the new season must be signed before June 30.
A Fonterra spokesperson told Dairy News that while it couldn't comment on what Coles is doing, in terms of its own milk supply, it has come out early with an opening price.
"Coming out early with an opening price for the new season means out team has been able to get a head start and are out talking to farmers and getting agreements signed ahead of the 30 June deadline.
"The response from our farmers on our price announcement has been really positive; they appreciate the early signal which helps them plan for the season ahead."
Fonterra has been facing strong competition in Australia from other processors like Saputo. In its latest Global Dairy Update, Fonterra says its season-to-date collection to April 2021 is down 1.1% compared to last year.
Farmers seeking a better milk price have been dropping processors and signing directly with Coles.
Coles launched its direct-sourcing model in Victoria and New South Wales in 2019. The model was extended to South Australia and Western Australia in 2020.
Under the model, Coles offers a farmgate price to farmers, and pays dairy processors to process and bottle the milk. Under a processing agreement, Bega Dairy & Drinks will process and bottle milk sourced from Tasmanian farmers at their plant in Hobart to produce Coles Brand fresh white milk. It is now recruiting farmers to supply milk for Coles branded cheese.
Coles says it has over 60 Australian dairy farms supplying milk under direct contracting arrangements.
By sourcing directly for Coles Brand Cheese it expects to lift this number to around 100 Australian farms across the country supplying around 400 million litres of milk every year.
Dairy farmer Peter Delahunty from Alvie in Western Victoria said that his three-year supply contract with Coles, signed in July 2020, was a game-changer for his dairy farm.
"Having direct access to the Coles Dairy Team was important to my business as it gives true meaning to 'working as a team'," he says.
"The financial certainty of a three-year price and the day-to-day support of my farm has been the best I have experienced in my 46-year farming career."
Charlotte Rhodes, Coles general manager for dairy, says the success of direct sourcing for Coles Brand milk and positive feedback from dairy farmers had prompted the expansion of the model to Coles Brand Australian cheese.
"Every time we have been to market looking to buy milk directly from farmers the response has been very positive, and we really value the relationships we have been able to build with our dairy farmer suppliers," she said.
"Extending our direct-sourcing model is part of our commitment to investing in a sustainable future for the Australian dairy sector, and our farmers have told us that it has made a real difference for their businesses."
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
OPINION: Farmer shareholders of two of New Zealand's largest co-operatives have an important decision to make this month and what they decide could change the landscape of the dairy and meat sectors in New Zealand.
OPINION: As CEO of the Dairy Board in the 1980s I was fortunate to work with a team of experienced and capable executives who made most of the brand investments that created the international consumer business Fonterra inherited. Soprole in Chile was the largest, but there were more than 20 countries where consumer marketing companies were established and Anchor and other brands were successfully launched.
Fonterra has delivered a fifth straight year of record organic milk price for farmer suppliers.
Fonterra says favourable weather conditions supporting pasture growth is boosting milk production.
Like many manufacturers around the world, European agricultural machinery and tractor manufacturers are currently operating in a difficult market environment. But they are heading to the world’s largest agricultural machinery event in Hanover next month with a degree of cautious optimism.
Established in 2021, the John Deere Technician of the Year Awards champion the important contribution parts and service technicians make to the Australian and New Zealand agriculture, construction and forestry industries.
Beef + Lamb New Zealand (B+LNZ) is calling on farmers from all regions to take part in the final season of the Sheep Poo Study aiming to build a clearer picture of how facial eczema (FE) affects farms across New Zealand.
New Zealand is closer to eradicating bovine TB than ever before, but possums remain a threat, says Beef + Lamb New Zealand.
Foreign Affairs Minister Winston Peters has joined the debate around the proposed sale of Fonterra’s consumer and related businesses, demanding answers from the co-operative around its milk supply deal with the buyer, Lactalis.
The ACT Party says media reports that global dairy giant Nestle has withdrawn from the Dairy Methane Action Alliance shows why New Zealand needs to rethink its approach to climate.
OPINION: Dairy industry players are also falling by the wayside as the economic downturn bites around the country.
OPINION: Methane Science Accord, a farmer-led organisation advocating for zero tax on ruminant methane, will be quietly celebrating its first…
