Coles and Aldi increase milk price to support struggling dairy farmers

Supermarket giants Coles and Aldi have followed in the footsteps of their competitor Woolworths by increasing the price of their own brand milk to support struggling dairy farmers.

As of Wednesday the two chains will boost the cost of the two- and three-litre milk by 10 cents a litre in hopes of relieving the financial pressure felt by drought-stricken farmers across the country.

In a statement released on Wednesday, Coles said the price increase would come into effect immediately. The price of two-litre milk will increase to $2.20, while the three-litre will cost buyers $3.30.

The announcement comes after the supermarket initially decided against following Woolworth’s suit after they increased milk prices by 10 cents per litre in February.

Speaking about the supermarket’s price change Coles Group Chief Executive Officer Steven Cain said they will work with dairy processors to ensure the benefit of the retail price increase will go directly to the dairy farmers who supply Coles Brand milk.

“Coles sources 100 per cent of our Coles Brand fresh milk from Australian farmers, many of whom are struggling as the impact of drought compounds ongoing challenges in the dairy industry,” he said in a statement.

“Coles supports proposals to make Australia’s dairy industry more sustainable, and we are continuing to explore long-term solutions with government and industry stakeholders. However, we know that many dairy farmers cannot wait for structural reform to be delivered so we are moving to provide relief right now.”

Read more: Coles will not follow Woolworths in dumping $1-per-litre milk

Aldi Australia will also follow suit with prices increasing to $2.20 for a two-litre milk and $3.30 for a three-litre milk as of Wednesday.

While the supermarket has accepted cost increases from milk processors to cater for drought and associated issues in the past few months, Managing Director of Buying Oliver Bongardt said it was time to pass on this higher price to consumers.

“Our decision to increase fresh milk prices has been reached in recognition of the significant issues currently impacting the dairy industry and the fact that broader government-led policy reform is unlikely to occur in the short-term,” he said in a statement.

Bondardt went on to say the increase is only a short-term measure that will allow processors to immediately pass additional funds to their dairy farmers outside of normal seasonal adjustments. He explained Aldi will work with processors into the future to ensure prices for milk reflect the current market conditions and support the long-term viability of the dairy industry.

“Aldi remains committed to the Australian dairy industry,” he said. “We look forward to the introduction of government-orchestrated structural reform in accordance with the recommendations to the ACCC’s 2018 Dairy inquiry final report.”

The move follows identical price changes by Woolworths around four weeks ago. Last year, the supermarket giant began offering a Drought Relief Milk range, which included a 10 per cent levy which was donated back to the farmers. But it also continued to sell its $1 range alongside the more expensive product.

“We believe the long term sustainability of our dairy industry – and the regional communities they help support – is incredibly important for Australia,” Woolworths Group CEO Brad Banducci said at the time.

“This is affecting milk production and farm viability, which is devastating for farmers and the regional communities in which they live. It’s clear something needs to change and we want to play a constructive role in making this happen.”

What are your thoughts on this? Are you happy to see Coles and Aldi follow in Woolworths’ footsteps to increase milk prices?