Processors are earning more from milk-Choice

By Country News on August 18, 2016
  • Processors are earning more from milk-Choice

    Where will the milk money go?

A cheap milk boycott prompted by widespread concern for dairy farmers in need could lead to an additional $113 million spent on milk nationally.

However, concerns have been raised about how much of the extra profit will go to the farmers.

Consumer watchdog Choice says there has been no guarantee any increased profit will be passed onto farmers by dairy processors Murray Goulburn, Fonterra and others.

"If the current private-label milk boycott continues, consumers look set to spend tens-of-millions more this year in the belief that purchasing branded milk will result in farmers receiving a bigger pay day," Choice spokesman Tom Godfrey said in a statement on Wednesday.New figures released by Choice reveal sales of private-label milk dropped significantly after the cheap dairy boycott began in May, falling from 63.3 per cent of sales by volume to 50 per cent.Choice predicts an additional $113.7 million profit over a 12-month period to May next year based on the current sales trend.

"If Australians continue to buy branded milk at the current rate, Choice estimates they will end up spending an extra $113.7 million, taking total sales to $1.5 billion up from $1.39 billion between August 2014 to August 2015," Mr Godfrey said.The boycott began after processors downgraded the price paid to farmers for dairy products, prompted by sales of private-branded $1 per litre milk by supermarket giants Coles and Woolworths.

However, Choice is calling for milk processors to confirm they will pass on an additional profits from branded milk sales to farmers."With the average farmgate milk price typically around 36 per cent of the average fresh milk retail price, we calculate that if the additional money is passed on by milk processors that farmers should get an estimated $41 million payday," Mr Godfrey said.

By Country News on August 18, 2016

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