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Dairy co-op Norco lifts direct milk price to farmers 6.5 cents a litre but Coles still refuses to budge on $1 milk

Kim Honan, Thursday March 7, 2019 - 20:26 EDT
ABC image
Major dairy processor Norco has raised its direct price to farmers by 6.5 cents a litre. - ABC

Dairy co-operative Norco is lifting the price paid directly to its farmers by 6.5 cents a litre for the next three months, with the price to be revised in June for the year ahead.

The Lismore-based dairy co-operative declined to comment on the price increase, but it is believed that the money is coming from Coles — despite the supermarket refusing to budge on the price of its dollar-a-litre milk.

Norco suppliers of the Lismore-based processor were notified of the increase on Friday March 1 in a letter marked 'Private & Confidential - Internal to Members Only' and that any disclosure to and use by third parties was not authorised.

The dairy co-operative has declined to comment to the ABC on the 6.5 cent a litre increase, and has not issued a media release, but Norco has distributed a letter through other channels to notify the public and consumers of the rise.

In that letter Norco says that it is implementing a milk price increase across more than 6,000 customers of its fresh milk business, and that the Grocery and Route Trade market will be funding the average 6.5 cent increase from April 1.

The deputy chairman of Norco, Michael Jeffrey, thanks consumers for supporting the dairy farmers who supply the co-operative with milk.

"There has been much discussion about the varying strategies of the major retailers in relation to the sales price of white milk in their supermarkets and how they are supporting Australian dairy farmers," he said.

"As a co-operative that supplies milk to many channels, we want to thank all our customers and consumers for recognising that there was been a serious deterioration in the viability of the dairy industry and for taking steps in the right direction to correct this by continuing to support the 100 per cent farmer owned Norco brand."

The ABC believes that Coles, which buys approximately 70 million litres of milk from Norco per year for its home-brand dollar milk, will absorb the extra cost and not pass it onto the consumer by lifting the price of its $1 milk.

In a statement, a Coles spokesperson has continued with its position that the supermarket giant "has been exploring additional options to support Australia's farmers, including how we ensure that drought assistance initiatives are as efficient and effective as possible".

"At the moment, there are a variety of different models being adopted by retailers and producers," it said.

Queensland Dairy Organisation vice president Matthew Trace, who sends his milk to Norco which supplies the Coles private label, took the extraordinary step of urging consumers to boycott his milk.

"I think the 6.5 cent increase will have them in the game, and certainly competitive … but if farmers can't get the money out of supplying milk to Coles they'll have to supply somewhere else," he said.

"If Coles sticks to a dollar-a-litre it will not be sustainable to supply milk to Coles for me. No way."

He said there was a risk that if Norco could not compete with the prices offered by Woolworths suppliers Parmalat or Lion, .

If Coles did lift the price of its $1 a litre milk that increase from the retailer Norco has a contract with Coles to supply milk for its cheap home branded milk, and the increase from the processor would be expected to flow back to Norco dairy farmers, as has been the case with Parmalat suppliers .

The price rise will apply for the three months from the start of April, with the price to farmers to be revised in June this year for the year to follow.

Shane Hickey, a dairy farmer from Kyogle, said the increase would take the base rate up to 60.5 to 61.5 cents a litre.

"If the farmers don't get another increase and get it up to about 70 cents the exodus is going to be massive," he said.

"I'm pretty sure the 6.5 cents is not going to be enough to keep a lot of farmers going. I know that, I know that for a fact."


© ABC 2019

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