Two weeks ago, various media outlets reported that major supermarkets may be set to increase the price of a number of discounted products. This came on the back of a report conducted by leading market research company Nielsen, which suggests that Australian supermarkets lose $10 billion a year on "wasted" discounts.
That is selling products at a discounted price when customers would have bought the product regardless.
So it was of little surprise early last week when Australia’s third largest supermarket chain, Aldi announced a price increase on milk from $1.29 for $1L, 2L at $2.39 and 3L at $3.59. Woolworths quickly followed and Coles followed suit on Friday.
When we petitioned to have the supermarkets remove the floor price of $1 per litre from their shelves via the Drought Levy campaign, we were criticised on several fronts. We had the supermarkets and even our own Prime Minister tells us that the “poor ole Aussie battler” needed to be given discounts on staples such as fresh white milk.
But when Woolworths and Coles and subsequently all supermarket groups increased the price of its discount milk lines, we did not hear a word of complaint.
Our own communications officer spent several days asking shoppers in the supermarkets about the price rise. We actually tried to find someone prepared to object to paying more to pay our farmers a fairer price.
Surprise, surprise, no one objected.
In fact, many suggested they’d be happy to pay even more if it would ensure the future supply of fresh local milk.
Long-term discounting on staples like fresh milk, cheese and butter has never made economic sense and this report provides the data that proves it.
Most shoppers are still in the dark about how bad things have got for the dairy industry. They don’t know that milk production is at an all-time low and that farmers are dropping out of the industry at an alarming rate.
Over the coming weeks, QDO and other state-based organisations will be renewing its efforts to increase the farmgate price.
We will be using evidence such as this marketing report to push for an increase to the RRP of milk back to a pre-discount price of $1.50 per litre. Further we are looking to have the supermarkets commit to increase the floor price on discounted cheese and butter.
By doing this, processors will be in a position to increase the RRP on their own branded products and ultimately to pass the retail price increase back to their farmers. While it has taken a crisis to reach this point, now is the time to redress the imbalance in the value chain and give farmers the fair farmgate price that they deserve.
Brian Tessmann – QDO President.