Woolworths 10c Increase on Litre of Fresh Milk

Numpty21 on 19/02/2019 - 16:29
Last edited 22/02/2019 - 01:19

On 19 February Woolworths removed $1.00 per litre fresh milk by increasing the price on all 2 litre and 3 litre varieties of Woolworths branded fresh milk to $2.20 and $3.30 respectively.

"The extra 10 cents per litre is guaranteed to go to Australian dairy farmers in full".

Will the farmers really benefit? Woolwoths don’t buy this milk directly from farmers, so i don't believe that the farmers will see the full benefit.

Are consumers happy to pay the extra 10% if it does help farmers or should farmers be treated like other industries and not assisted in this way?

A gimmick IMO and i believe in the long term the only winners here will be Woolworths and their suppliers at the expense of the consumer.

Woolies are doing nothing to help the farmers directly, forcing consumers to pay the extra $ and coming out smelling of roses. Why don't Wolllies donate some of their profits instead if they are so concerned. As a company they are contributing $0 to farmers with this increase.

Food & Grocery Milk

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Comments

  • wizzy on 19/02/2019 - 16:40
    +32

    I am happy to pay this small increase in order to help farmers.

    • Numpty21 on 19/02/2019 - 16:43
      +13

      I'm happy to help farmers too, but i'm not convinced that Woolworths will pass on all the increase.
      Also i think the increase should be temporary until farming conditions improve.

      • wizzy on 19/02/2019 - 16:51
        +6

        I hope Woolworths is held accountable!

        • Scrooge McDuck on 19/02/2019 - 23:00
          +30

          I am happy to shop at Coles or ALDI instead of Woolworths.

          • Kentrolla on 20/02/2019 - 12:15

            @Scrooge McDuck: I'd do that too if it wasn't for the 9.75% discount at Woolworths (family members 5% off + 5% from cashrewards gift card).

        • Associatedsashatheman @ Woolworths on 20/02/2019 - 09:42
          +23

          The payments will be passed on in full by the processors that will be independently audited.

          "Under the model, the extra 10 cents customers pay on each litre is distributed in full to dairy farmers by processors in line with the usual payment cycles. The distribution of the additional funds will have continued oversight and be independently audited."
          https://www.woolworthsgroup.com.au/page/media/Latest_News/wo…

          • Taro Milk Tea on 20/02/2019 - 10:44
            +17

            @sashatheman: That's good, after that, release the audit result to public so that we can believe it too.

            • D6C1 on 20/02/2019 - 17:05
              -1

              @Taro Milk Tea: There will be one for the public and one internal. release the public audit, keep the internal.. well you guessed! Internal.

      • [Deactivated] on 20/02/2019 - 18:48

        This… so much this.

    • HighAndDry on 19/02/2019 - 17:17
      +52

      You are, and have always been, free to donate directly to the numerous charities which help farmers. You've never needed Woolworths' permission to do so.

      • wizzy on 19/02/2019 - 17:25

        Yes of course.

      • Cheeper on 19/02/2019 - 19:32
        +3

        True, but the farmers need to be paid a good price for their product and not bled dry by supermarkets.

        • HighAndDry on 19/02/2019 - 20:24
          +6

          I commented below, but this is precisely the kind of conundrum supply-and-demand solves:

          Supply goes down - prices go up - more farmers go into dairy. As long as people want to drink it enough, the industry will survive.

          • Bargain80 on 20/02/2019 - 11:36
            +3

            @HighAndDry: supply and demand theory doesn't always work perfectly in monopoly or whatever poly situation

            • HighAndDry on 20/02/2019 - 11:44
              +2

              @Bargain80: You're looking for "Monopsony" but that doesn't apply. There's Coles, Woolies, IGA, other wholesale purchasers (milk powder companies for example). Supply and demand works well. (E.g.: it worked for bananas - remember when prices skyrocketed after (drought or storms?) up in QLD?)

              • Meconium on 20/02/2019 - 12:06
                +2

                @HighAndDry: It's not a monopsony, it's a duopoly (or close enough to it). There's not one buyer, there's two main retailers who can set the price. And they've done it, by bringing the price down to $1/litre.

                Consumer demand seeks the lowest price possible. The duopoly has set the price low as a loss leader because they consider milk to be a staple commodity in Australia. But the loss is worn by the dairy farmers rather than the supermarkets because it's been this way for a while, and consumers expect milk to be cheap. There's no shortage of supply because dairy is a varied industry that also supplies other goods that they can charge more for, such as butter, whey (for protein powders), cream, ice cream, veal etc.

                Less perishable commodities can also be exported, but there is a bigger market domestically for fresh milk. Farmers are complaining that the price is set artificially low because the duopoly won't pay more for it because they've persuaded customers to pay less for it. Supply and demand should solve it but I guess the situation isn't that bad that it's forced a large amount of dairy farmers out of business. This is probably due to the barrier to entry - setting up dairy farms costs a lot upfront so they are not inclined to give it up due to low milk prices. However, they are working for less pay than they believe they should be getting.

                • HighAndDry on 20/02/2019 - 12:10
                  +3

                  @Meconium: Well, technically it'd be a duopsony (?) in the same way monopoly (sellers of product) ==monopsony (buyers of product).

                  The reason that the buyers can set the price is because supply is too high. Woolies or Coles would not remotely consider the possibility of being in a position to have no milk to sell. If supply was limited, just the two of them would bid the price up.

                  Supply and demand should solve it but I guess the situation isn't that bad that it's forced a large amount of dairy farmers out of business.

                  This also means it's obviously not that bad, if they can still stay in business. In fact, I'm pretty sure that's the definition of "sustainable" - being able to stay in business.

                  However, they are working for less pay than they believe they should be getting.

                  If you surveyed 100 people, 99 people would give you the same response.

        • Seedy seed on 21/02/2019 - 08:23

          So put it up 50 cents a liter, then they will earn 63 cents per litre after costs.

      • Peace Maker on 20/02/2019 - 10:50

        If we ensured businesses paid a sustainable price to keep the industry alive there wouldn't be charities needed for those being killed off by the big grocery chains.

        • HighAndDry on 20/02/2019 - 11:10
          +5

          No, this is business. The fact that prices are too low means there are too many dairy farmers. If there weren't enough milk to supply Woolies and Coles, you'd very quickly see a bidding war between them (bidding up prices) to secure supply so that they don't run out of milk to sell. That's supply and demand.

          • MechEng on 20/02/2019 - 20:21
            +1

            @HighAndDry: There is also the fact that there are more brands than the generic on offer, thus the "monopoly" excuse is quite not there. There are in fact just a handful of large retailers that sell milk, but within those there is a variety of brands. If the consumer is so worried, can always choose to buy another brand, like Pauls, Maleny dairy, etc.
            For me the question lies in why the farmers are selling the milk at a loss.
            There may be someone (I mean a farmer) that is making profit with milk at 1 dollar, otherwise no body would sell it at that price.
            A sensible comment that I've heard today in the ABC came from a farmer that said that the price is not bad, but farmers in some regions are incurring additional costs due to the draught. If this is true, then perhaps rather than increasing the price of milk across the board, it would be better to set up a system to assist farmers affected by draught.

      • vr4indian on 22/02/2019 - 15:39
        +1

        Correct , It saves Tax as well.

        Assuming 3 ltr a day for a family means spending of $1000 plus on milk annually.

        This 10% “donation “ means around $100 in a year not counted towards “ tax free” for actual bread earners in a family.

        So family loose another $30 on top of $100.

    • aedeau on 21/02/2019 - 15:55
      +5

      in unrelated news, the Woolies CEO just bought himself a new jet.

  • Taro Milk Tea on 19/02/2019 - 16:41
    +15

    I will never believe that this will give more benefit to farmers until I see their books that proves more $ goes to farmer.

    Until that happens, I think Woolworths just want to 'milk' more money for their own profit.

    • Numpty21 on 19/02/2019 - 16:44
      +7

      i'm sceptical too

      • gazza the great on 20/02/2019 - 19:26
        +2

        I'ts a blatent attempt by woolworths to get the average Joe to say " Oh arn't they wonderful, looking after the farmers!". All they will do is raise the price of a few other products to cover the cost. For example, how much extra profit would they raise by putting 1c per litre on petrol and diesel across Australia just for a day? Be assured their bottom line will not be affected at all. As for that politician that fell for this gimmick… well, enough said about politicians!!

    • smalltime0 on 20/02/2019 - 17:03

      They've already had this model in place, they're just expanding upon it.
      You can expect the industry bodies and the National Party to kick a fuss about it, if they don't get the money.
      Woolworths is also a Publicly Traded company, so they have to be answerable to their shareholders (so expect questions about it at the AGM).

  • DemocracyManifest on 19/02/2019 - 16:42
    +12

    What's next, an extra 10c on all other products to help those companies out due to a drop in consumer spending?

    • [Deactivated] on 19/02/2019 - 16:47
      +15

      Because companies are evil and exploit workers.

      Farms are wholesome victims of unpredictable weather.

      Am I doing this right?

      • HighAndDry on 19/02/2019 - 17:18
        +7

        I feel far worse for the hundreds of thousands of heads of cattle which drowned (or starved) than for the farmers. I feel bad for them too, but no more than any other businessperson who suffers catastrophic losses.

      • bobbieb on 19/02/2019 - 19:15
        +23

        Farms are wholesome victims of unpredictable weather.

        Yeah… true, but there's still one issue that bugs me whenever topics like drought relief pop up.

        For pretty much every other industry - they are expected to operate and mitigate the risks inherent to their particular fields. Every industry is different… whether it's the need to hedge against exchange rate fluctuations, insure against robbery or other calamity, secure supply chains, or strategize for potential sources of disruption - the theme is the same: balancing risk/reward is inherent in what they do. Go hard, live loose… you may win big, but you may lose big.

        Why exactly is farming any different? Why isn't the onus on the farmers to own their choices when it comes to securing food and water supplies (or maybe even taking out insurance) during time of drought? It's not as if they're unaware of the environment in which they operating… We are the "land of droughts and flooding rains", are we not?

        • bobbieb on 19/02/2019 - 19:36
          +5

          Yeah… replying to my own post.

          For those that aren't aware, there is such a thing as insurance for farmers to cover such things.

          A bit of a lengthy read, but this (warning, PDF) is quite interesting.

          Edit: fixed link.

        • abb on 20/02/2019 - 12:29
          +1

          The government has chosen to subsidise the farming industry, for various reasons (security of food supply, it's a large portion of our exports, votes, etc).
          The government also chooses, from time to time, to subsidise many other industries in various ways, and perhaps to bail them out from catastrophes. Farming is far from unique.

          • bobbieb on 20/02/2019 - 19:39
            +1

            @abb:

            The government also chooses, from time to time, to subsidise many other industries in various ways, and perhaps to bail them out from catastrophes.

            Sure.. there have been the occasional one-off bail outs of individual players in some sectors (IMHO with limited degrees of effectiveness,) but I would still suggest that the farmers unique in the frequency and degree to which they cry out for hand-outs.

            I'm happy to be educated… if you have specific citations that prove to this be otherwise, feel free to put them forward.

            • abb on 21/02/2019 - 09:25

              @bobbieb: Off the top of my head:

              Construction / banking / real estate: Negative gearing tax breaks, first home buyer schemes
              Mining: tax breaks, permits profit shifting to Singapore, rather cheap licenses
              Tourism: international advertising campaigns
              Transport: "public-private partnership" (toll roads, airports etc), don't have to pay for the health damage caused by emissions
              Research & Development: tax breaks, matched funding
              Electricity: guaranteed ROI
              Military: their entire existence…

              • HighAndDry on 21/02/2019 - 10:43

                @abb: But the agricultural industry already gets numerous similar tax breaks and exemptions. You're asking for even more.

                • abb on 21/02/2019 - 12:32

                  @HighAndDry: I'm not asking for anything, I'm saying that farming is viewed as a matter of national importance (read: votes) and that's why it gets bailed out when necessary.

                  • HighAndDry on 21/02/2019 - 12:37

                    @abb: That might explain why they are bailed out, but not a justification for why they should be bailed out. I think the argument here is that the government shouldn't be bailing them out. "Votes" is not a good reason (imo).

        • Harold Halfprice on 21/02/2019 - 11:51

          Why exactly is farming any different?

          Because we need food. That's the difference.

          Is there a single farming industry in the developed world that isn't subsidised?

          Farming, and food, are the most critical parts of maintaining a population. The government subsidises farming to keep costs low, consistent and accessible to people - and to keep farmers producing food for our population.

          • HighAndDry on 21/02/2019 - 12:42
            -1

            @Harold Halfprice: There's a base level of primary production we need to maintain for strategic self-sufficiency reasons.

            But considering milk is currently selling for $1/L (and therefore being produced for far less than that), I'm not seeing any issues with affordability or accessibility.

            • samfisher5986 on 21/02/2019 - 16:28
              +1

              @HighAndDry: Farmers don't set the price milk sells for unless they sell their own brand privately, which is rare.

              • HighAndDry on 21/02/2019 - 16:45
                -1

                @samfisher5986: Maybe not individually, but they control/influence the price via their negotiations with dairy processors, who in turn negotiate prices with the supermarkets.

                Basically - no one is putting a gun to any farmer forcing them to sell their product at any set price.

                • [Deactivated] on 21/02/2019 - 19:55

                  @HighAndDry: Correct, but if they don't accept they typically shut-down the farm soon after

                  • HighAndDry on 21/02/2019 - 19:57
                    +1

                    @[Deactivated]: And, sad as that may be for individual farmers, that may be what's needed to decrease supply so that there's no longer a glut in the market pushing prices down. Prices are ultimately still a function of supply and demand.

      • serpserpserp on 21/02/2019 - 13:27
        +3

        Farmers would never exploit workers.

        https://www.smh.com.au/business/workplace/fair-work-blitz-fi…

    • wizzy on 19/02/2019 - 16:48
      -1

      That is not what is happening here though. We are not talking about a luxury consumer item. Milk is a staple food product in most households. If farmers cannot survive under current economic and climatic conditions then we won't have any milk. Then everyone will suffer.

      • [Deactivated] on 19/02/2019 - 16:55
        +8

        And the only farmers still producing milk can charge whatever they want.

        Those farmers will be rich.

        Other farmers will want a slice of that pie.

        They'll also become dairy farmers.

        Supply increases.

        • wizzy on 19/02/2019 - 17:03
          -1

          Yes, but in the interim there will be a huge shortage of milk and dairy products and everyone will suffer. Milk is a staple product.

          • [Deactivated] on 19/02/2019 - 17:07
            +8

            @wizzy: "Suffering" is stretching it.

            Sure we'll have to be inconvenienced for a while but true supply and demand would eventuate.

            And if you think the cows are just going to be culled, that would be the equivalent of burning down a building everytime a lease ends.

            The cows have value, someone will buy them for the milk they produce, the milk which no one seems to be supplying and the consumers who are "suffering" will pay anything for.

            • wizzy on 19/02/2019 - 17:22
              -2

              @[Deactivated]: Baby formula is made from milk.

              Toddlers and young children need milk and dairy products daily to help them grow properly.

              Milk is used as a supplement to feed the very sick and elderly when they lose the ability to swallow solid food.

              It would be more than just an "inconvenience" to a large sector of the community, including our own health care sector.

              • [Deactivated] on 19/02/2019 - 17:27
                +10

                @wizzy:

                Baby formula is made from milk.

                I thought they're made from babies.

                Seriously though, most mother's can lactate sufficiently for their child. It is inconvenient but they can. For those who are medically unable, alternative sources like importing from NZ is inconvenient but certainly possible.

                Toddlers and young children need milk and dairy products daily to help them grow properly.

                I'm anything but vegan but this is simply false.

                Milk is used as a supplement to feed the very sick and elderly when they lose the ability to swallow solid food.

                Not all meal replacements are made from dairy. A substantial range is soy based.

                It would be more than just an "inconvenience" to a large sector of the community, including our own health care sector.

                If by healthcare you mean health and wellness sure. If you mean medical sector? No.

                • wizzy on 19/02/2019 - 17:58
                  +1

                  @[Deactivated]:

                  For those who are medically unable, alternative sources like importing from NZ is inconvenient but certainly possible.

                  Of course it is possible, but is it affordable for all of those mothers? Would the government end up having to subsidise it? Would NZ be ok with it?

                  I'm anything but vegan but this is simply false

                  Not false. Children need calcium daily in order to grow properly. There are of course other sources of calcium available (like seeds and lentils), but milk and dairy products are by far the most widely consumed. Would there be enough seeds and lentils for all the children who can't get milk?

                  Not all meal replacements are made from dairy. A substantial range is soy based.

                  Are there enough of those soy based meal replacements available? Is everyone able to eat those? Will the person with dementia in the nursing home agree to eat the soy based meal replacement instead of their usual yogurt?

                  If by healthcare you mean health and wellness sure. If you mean medical sector? No.

                  I mean the hospitals and nursing homes that feed their patients milk products daily. Sometimes to babies, sometimes to children, sometimes to the elderly and dying. They will have to import those products from NZ or elsewhere (at the expense of tax payers) or try to find suitable substitutes quickly in an overstretched market.

                  • [Deactivated] on 19/02/2019 - 18:11
                    +5

                    @wizzy:

                    Of course it is possible, but is it affordable for all of those mothers? Would the government end up having to subsidise it? Would NZ be ok with it?

                    The answer to a malignant system caused by government intervention isn't yet another subsidy program. Mother's that cannot lactate and cannot afford formula would be a niche.

                    There's always going to be someone that falls in the crack and those are dealt with on a case by case basis.

                    Heck, the same sort of argument can be made for anything. Example - shortage of foot powder. I could be an old man who would suffer considerably because I'm allergic to my own sweat and any other treatment.

                    Not false. Children need calcium….

                    Hmmm. We need calcium for healthy bones. Where do we get calcium. Hmmm…

                    (Hint. Bones)

                    Are there enough of those soy based meal replacements available? Is everyone able to eat those? Will the person with dementia in the nursing home agree to eat the soy based meal replacement instead of their usual yogurt?

                    Yes, always a special case out there.

                    I mean the hospitals and nursing homes that feed their patients milk products daily. Sometimes to babies, sometimes to children, sometimes to the elderly and dying. They will have to import those products from NZ or elsewhere (at the expense of tax payers) or try to find suitable substitutes quickly in an overstretched market.

                    So, only the people that need the product will be included in the subsidy? That's unthinkable.

                    • wizzy on 19/02/2019 - 19:08
                      -1

                      @[Deactivated]:

                      The answer to a malignant system caused by government intervention isn't yet another subsidy program.

                      Yes I agree. That is why I am ok with a little bit of a price increase now to prevent a worse problem down the track that results in government subsidies.

                      Mother's that cannot lactate and cannot afford formula would be a niche.

                      Maybe it would be a niche problem or maybe it wouldn't be. Lots of women can't produce enough milk, or can't pump enough milk in order to return to work without relying on formula. Who knows how many women wouldn't be able to afford formula in a highly competitive market where formula is expensive and in short supply?

                      Hmmm. We need calcium for healthy bones. Where do we get calcium. (Hint. Bones)

                      Thanks for the hint. Unfortunately, bones do need calcium in order to grow. They don't make their own calcium. Once they have finished growing, they still need calcium in order to maintain proper bone density.

                      Yes, always a special case out there.

                      Special cases still matter.

                    • DaneD on 20/02/2019 - 12:29
                      +1

                      @[Deactivated]: @tshow

                      Is that you Milton Friedman? Please stop wasting your time with @wizzy aka John Keynes.

                      • [Deactivated] on 20/02/2019 - 15:01

                        @DaneD: Done.

        • Harold Halfprice on 21/02/2019 - 11:57

          Those farmers will be rich.

          Other farmers will want a slice of that pie.

          They'll also become dairy farmers.

          And how many years will it take for the market to re-stabilise? It would be ridiculous if we can't even maintain consistency within our own market on a staple commodity such as milk.

          Because it's that easy to just become a dairy farmer? Let alone become a dairy farmer whilst the supply would be controlled by the few remaining, and now rich (as you say)

          • [Deactivated] on 21/02/2019 - 12:01
            -1

            @Harold Halfprice: Yup yup yup.

            The dairy farming status quo has doomed farmers forever so we should guarantee this particular industry remains profitable.

            For our own good.

            Buuuuuut. Let's dissect your opinion as it is lunch time.

            And how many years will it take for the market to re-stabilise?

            If dairy farmers are dumping their stock, someone will buy them because they are cheap. The cows keep ticking as they say.

            It would be ridiculous if we can't even maintain consistency within our own market on a staple commodity such as milk.

            This statement works both ways. I agree it would be ridiculous hence why I think the consistency of supply, however affected, will not be disastrous.

            Because it's that easy to just become a dairy farmer?

            It's hard work but it is not complex work. Besides, that's entirely irrelevant because dairy farmers do not need to be the business owner. If the farmers cannot run efficiently and profitably, a corporate will come in and employ the farmers to run their farms instead. The farmers will be working for a wage (and the undervalued employee union begins).

            Let alone become a dairy farmer whilst the supply would be controlled by the few remaining, and now rich (as you say)

            The farmer may not become rich but they'll have a stable income. If they cannot manage risks, negotiate fair deals, and save for "unpredictable" weather, a savvy business operator will take charge.

      • HighAndDry on 19/02/2019 - 17:33
        +2

        There's no inherent limit on milk production other than supply and demand.

        Supply goes down - prices go up - more farmers go into dairy. As long as people want to drink it enough, the industry will survive.

    • Numpty21 on 19/02/2019 - 16:48
      +9

      agreed.
      I know farmers are doing it tough at the moment but when times are good do they drop prices accordingly? I think not.
      Why do farmers always get additional help but other industries are left to sink.

      • [Deactivated] on 19/02/2019 - 17:29
        +5

        Because they wear a hat, stand next to someone of the opposite gender, also in a hat, and they hold a freckled child (or more) in front of them.

        Typical

        They're obviously holding the kid hostage.

        [Deactivated] on 19/02/2019 - 17:29 (Collapsed - Offtopic. Show)
        • HighAndDry on 19/02/2019 - 17:48
          -3

          stand next to someone of the opposite gender

          That's homophobic. I request, nay demand, this hate speech be removed!

          • [Deactivated] on 19/02/2019 - 17:51

            @HighAndDry: I said opposite. That may still be the same. The spectrum is more of a globe with a wormhole connecting the two ends of the sphere.

            Unless… wait… You actually think that gender is binary?

            … like speaking to Neanderthal or worse, a conservative.

        • horice on 19/02/2019 - 19:18

          Sorry but that is too good a quote to not steal for future usage

        • SlartiBartFozz on 20/02/2019 - 14:08

          was thinking of this one:

          https://www.agdaily.com/wp-content/uploads/2018/01/inset-art…

          they just need a pitchfork to complete the image (farmers' hats were off-camera when this portrait was done).

          • [Deactivated] on 20/02/2019 - 14:39

            @SlartiBartFozz: Oh, it's uncle Jebediah and aunt Greta!

  • qwerty on 19/02/2019 - 16:42
    +1

    Coles did it for their 3l milk which i think is still running

    Aldi did nothing

    I dont see why woolies is getting hate if the actual money goes to the farmers

    • Ade99 on 20/02/2019 - 09:02
      +2

      because the farmer will never get a sniff of the cash!. The intermediates will gobble it up long before it reaches the fam gate..…..

      • abuch47 on 21/02/2019 - 18:08

        Laos woolworths and any other corp dont do it for the farmers or consumers. They do it for branding/advertising equals profit.

        prices go down, down, down. we raise it by a tiny margin with some helping society spiel. we are good guys come to us.

  • [Deactivated] on 19/02/2019 - 16:46
    +13

    $1.10 now. 10¢ goes to farmers.

    In a few weeks, drop the philanthropic BS but the price stays the same.

    $1.10 from now on. 10¢ extra net profit.

    • Numpty21 on 19/02/2019 - 16:47

      exactly how i see it playing out.

      • [Deactivated] on 19/02/2019 - 16:48
        +4

        Everytime and yet it works.

        I guess we're the stupid ones. 10¢ every few days and they get to feel like Gandhi.

        • Numpty21 on 19/02/2019 - 16:55
          +4

          Prices are $1/lt because Wollies/Coles screwed the farmers.
          If they genuinely cared for farmers prices wouldn't be $1/lt for the past few years.

          They have no interest in helping farmers just after some positive PR.

          • [Deactivated] on 19/02/2019 - 17:00
            +13

            @Numpty21: Woolies and Coles are businesses. Like any public listed company, their greatest asset is their ability to generate favourable dividends to the thousands of shareholders who do not care where the money comes from.

            Some of those shareholders are the dairy farmers themselves.

            Dairy farmers are not forced to be dairy farmers.

            Dairy farmers are not forced to sell their produce (they may have voluntarily entered a supply contract) to said companies.

            If the roles were reversed and the dairy industry held the upper hand when negotiating with retailers, I don't for a second think we won't be paying through our noses for the product.

            • Chandler on 20/02/2019 - 10:52

              @[Deactivated]:

              Dairy farmers are not forced to sell their produce (they may have voluntarily entered a supply contract) to said companies.

              No they aren't. But they do need to sell the produce. And if you won't sell to Woolworths (et al) at the price they want to pay - since they hold most (if not all) of the bargaining power - then who will you sell to?

              • [Deactivated] on 20/02/2019 - 11:30
                +5

                @Chandler:

                then who will you sell to?

                The reason why other processors are no longer in business is because the dairy farmers wanted top dollar. They took the offer of Coles and Woolies that drove the other dairy processors and wholesalers out of business.

                Now that a duopoly is what remains dairy farmers find themselves in a weak bargaining position and the public is meant to bail them out?

                I think not. Let them deal with the duopoly whether that is by suffering their squeeze or break the cycle at their cost.

          • Chandler on 20/02/2019 - 10:50

            @Numpty21: My thoughts exactly:

            "Why is it $1 per litre to begin with?"

            "Because Woolworths et al push prices down, with the goal of course to maximise their own profits"

            Yes - customers want it cheap, but most not at the expense of the farmers (as will be seen by the response to the 10c "levy").

            Instead of increasing the price by 10c, why don't they decrease their net profit on them by 10c and give THAT to the farmers.

            • HighAndDry on 20/02/2019 - 12:14

              @Chandler: That makes no sense:

              "Because Woolworths et al push prices down, with the goal of course to maximise their own profits"

              Surely lower prices also lower their own margins.

              The real reason is:

              "Because consumers want cheaper prices". And this is immediately provable, because more expensive milk already exists, but people still buy the $1 milk.

              • Chandler on 21/02/2019 - 11:30

                @HighAndDry:

                Surely lower prices also lower their own margins.

                Clarification - when I said push prices down, I mean the price they pay for the milk, not the price they charge.

                • HighAndDry on 21/02/2019 - 11:32

                  @Chandler: Okay but you prefaced it with:

                  "Why is it $1 per litre to begin with?"

                  Which is the price they sell milk at, not their cost price. I'm sure they push down their cost price as much as possible, but maximising the margin between cost and selling prices is basically the entire retail model.

                  • Chandler on 21/02/2019 - 11:39
                    +1

                    @HighAndDry: True. Really bungled that post didn't I?

                    "Why is it $1 per litre to begin with?"

                    Sale price is $1 per litre because consumers want cheap milk, and Woolworths (et al) can sell volume at lower prices.

                    But how do they sell it for a profit (because that's why they're there)? Buy it for less!

                    "Because Woolworths et al push prices down, with the goal of course to maximise their own profits"

                    They sell it for a profit by driving their buy price down. Because of our supermarket duopoly, farmers have the option of selling their milk for the price that the duo want to pay, or getting left holding the milk.

                    I know I'd rather not go on a whole milk (heh) diet.

    • MechEng on 20/02/2019 - 21:47

      Well, 10c goes temporarily to the farmers that produce the homebrand milk only. I am wondering what is the proportion of farmers that produce home brand milk. Last time I checked there is no home brand milk factory, they are all produced by large dairy producers, so how do you identify who receives the additional 10c?
      Do we assume that such large dairy company pays different to farmers that produce raw milk for the home brand and raw milk for branded milk?

  • GG57 on 19/02/2019 - 16:50
    +5

    There are a few steps in the purchasing chain before that $ gets to any farmer. I can't see how the additional $0.10c retail will make it through that chain without diminishing.

    • CMH on 19/02/2019 - 18:32
      +1

      You are absolutely right.

      The next question I have is how is Woolies being made accountable for all this money they're "collecting"?

      Same with all those "tin rattlers" you get collecting money for all sorts of charities. I'd be surprised if the charities receive half of any monies they receive.

      • BartholemewH on 22/02/2019 - 09:14

        Chugging companies keep upward of 70% in many cases.

    • Ade99 on 20/02/2019 - 09:00

      better wollies drops the price to 95Ct and then gives the farmer the extra out of the profits from selling single use carrier bags etc.

  • wannagrababargain on 19/02/2019 - 16:54
    +4

    Well here are the processors for Woolworths.

    http://www.ausfoodnews.com.au/2014/04/07/woolworths-announce…

    So they would either have had to re-negotiate their contracts to say "We want to give you free money, on the proviso you promise to divvy it out to the farmers." Or they would be somehow bypassing the processers and divvying it out to the ~450 farmers, that supply those processors, directly.

    • Ade99 on 20/02/2019 - 09:01
      +1

      …but a lot of hipstas will believe the spin fom Woolies!

      • SlartiBartFozz on 20/02/2019 - 14:12
        +1

        Real Hipsters only drink hand-squeezed, fair-trade breast milk of bio-dynamic, organic, pasture-grazed, grass-fed oats or soya beans. They would rarely/never shop in a corporate chain supermarket.

        • BartholemewH on 22/02/2019 - 09:15

          They really are a marketer's dream customer.

  • rompastompa on 19/02/2019 - 17:16
    +1

    Thanks for the PSA. I will have to remember to budget an extra 30c/week.

  • cray on 19/02/2019 - 17:27
    +19

    I say Coles should seize this opportunity and announce a price reduction of milk to 90 or 95 cents/L and "donate" that 5 - 10 cents reduction to the local farmers for every litre of milk purchased. It'll be good PR/CSR and a huge tick from the consumers.

    • [Deactivated] on 19/02/2019 - 17:35
      +5

      That's actually genius. If I chaired a big company, I'd be getting in contact with you.

      • abb on 20/02/2019 - 12:31
        +1

        I bet you'd just pretend it was your idea…

        • [Deactivated] on 20/02/2019 - 12:44
          +9

          I didn't become the chair by giving out credit.

          It's all about talent management and recognition.

          Don't hate the player…

    • Neoika on 19/02/2019 - 21:04
      +1

      Don't forget Coles increased 1kg plain/self-raising flour to $1 first in January. Woolies and Aldi followed suit one week later.

  • Seraphin7 on 19/02/2019 - 17:40
    +4

    Woolworths should just be donating this directly from the cost savings brought by their elimination of complimentary shopping bags, and the related increased sale of substitutes, without involving price hikes on the consumer.

  • coin saver on 19/02/2019 - 18:12
    -1

    If the Dairy farmers are doing it so bad why haven't they mated their cows to beef bulls for the last 2yrs to replace the cattle that will not be going into the beef cattle market due to the loss of numbers caused by drought and more recently floods.When the drought properly breaks there will be no female cattle going for slaughter and prices will hit the roof.

    • Greihawk on 20/02/2019 - 13:27
      +1

      Because dairy cattle are not beef cattle, in the same kind of way that Chihuahuas are not Great Danes.

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