The supermarket giants in Australia have started a food discounting war. In a blatant marketing push Coles began the discounting war by reducing the price of two litre Coles brand milk by 33 percent from $2.99 to $2.00.
Rivals Woolworths, Aldi and Franklins matched their discounted price almost immediately.
In the Sydney Morning Herald James Kirby has reported “a litre of milk is now cheaper than a litre of bottled water”.
Australian Dairy Farmers have immediately responded by issuing a press release that calls the discounted price “unsustainable” and asks Coles to “prove” that farmers will not be adversely affected. On the Australian Dairy Farmers website it explains that milk prices in Australia can be volatile as they are not protected by legislation like many countries in the world:
“Farmgate prices can vary between manufacturers, with individual company returns being affected by factors such as product and market mix, marketing strategies and processing efficiencies. Australian milk prices are based on the milkfat and protein solids content of the milk. Payments from processors to individual farmers can also vary marginally, as firms operate a range of incentive/penalty payments related to milk quality, productivity and out-of-season supplies.”
Coles has stated that they will not be passing this cost on to farmers and will be taking the cost from their bottom line.
The Australian television program The 7PM Project highlighted on their website how difficult this is to monitor due to the dominance of the supermarket giants in food and petrol markets. Their website states petrol prices rose by up to 15 cents a litre to $1.439 a litre over the weekend. Fueltrac's Geoff Trotter is also quoted:
“In what appears to be a pretty coordinated move, it appears that Shell Coles express decided to move their service stations up in Brisbane, the Gold Coast and the Sunshine Coast …The major supermarkets are slugging motorists to subsidise their milk and bread war.”
In the same report a Coles spokesman said “the claim by Geoff Trotter was ‘ludicrous…we do not, and never have, cross-subsidised prices between our supermarkets and fuel sites".
So if the customers and farmers are not wearing the price reduction who is?
The dairy industry is facing increasing pressure to keep costs down and animal advocacy group, Animals Australia, suggests it is the cows that will bear the brunt of milk price reductions. Animals Australia have taken out full-page advertisements that state “over 700 000 baby calves called ‘bobby calves’ are slaughtered every year as waste from the dairy industry”. The 7PM Project interviewed Glenys Oojges, Executive Director of Animals Australia, about their current ‘bobby calve’ campaign and she said the slaughter was "a secret the industry doesn’t want consumers to know”. The majority of ‘bobby calves’ are slaughtered within the first week of their life and the campaign draws attention to a new industry proposal "to make it legal to deny ‘bobby calves’ liquid food for the last 30 hours of their life". Animals Australia highlights that ‘bobby calves’ would normally be suckling at least five times a day and are already distressed from being separated from their mothers. Their advertisement states that denying them food will “compound their misery and suffering”.
The 7PM Project also sought a response from the Australian Dairy Farmers, David Basham, who responded that it was not “feasible” to provide the calves food in their last 30 hours of life and that these practices have been in place for “years”.
The 7PM Project concludes their report with a challenge to consumers to consider what price we are really paying for cheap milk. As consumers we can all take action by informing ourselves about how our food is produced and refusing to purchase products that do not meet our own ethical standards.