This week, Woolworths announced it would no longer sell $1 litre fresh milk by increasing the price on all varieties of its branded fresh milk by 10 cents per litre. Removing this retail price cap is a positive first step for dairy farmers across Queensland, who have endured eight years of unsustainable milk prices, as it puts pressure on the other supermarkets to follow suit.
Prior to Australia Day 2011, when Coles first introduced $1 litre milk, there were 600 dairy farms across Queensland. Today, only 350 dairy farms remain operating across the state – a decline of over 40 per cent. While $1 litre milk is not the only reason for the rationalisation, it has contributed and is particularly relevant in our predominantly fresh milk market.
Woolworths, Coles and Aldi control over 80 per cent of the grocery market share in Australia. Price ceilings de-value dairy and other agricultural products and set an unrealistic price bias in consumers’ minds. For example, chicken meat is another staple that our retail giants treat as a ‘sacrificial product’ with the price of roast chickens dropping from $11 to $8 in 2016 and has remained well below fair market price since. The fierce competition between these companies to become the ‘consumer’s friend’ is a race to the bottom.
Cost of living pressures are rising for everyone, but consider that in Australia, consumers spend just 9.8 per cent of their household income on food each year – one of only eight countries in the world to spend less than 10 per cent. And consider that where $1 milk is concerned, it effectively means that dairy farmers have not had a pay rise for over eight years while input costs including electricity, water and feed have risen significantly.
The end of $1 litre milk is a small step in the right direction, but a just and important one. Time will tell if this is a genuine recognition of the damage that undervaluing high-quality agricultural products and putting long standing, non-cost reflective price ceilings on food has on the future of farming families.