Australian supermarkets are embroiled in controversy today as Australian dairy farmers representatives call for the competition watchdog to investigate how supermarkets set milk prices.
The furore erupted as a senate inquiry begins in Melbourne today on milk discounting. Some of the major supermarket players, including Coles, Aldi, Woolworths and Franklins have significantly reduced shelf milk prices, as the impact on the dairy industry is unclear.
Coles Supermarkets were the first of the big operators to slash milk prices to $1 per litre last month, forcing competitors such as Woolworths to follow suit.
Australian Dairy Farmers’ vice-president Adrian Drury commented:
“We urge the ACCC [Australian Competition and Consumer Commission] to investigate the pricing activity of Coles.”
The dairy farmers and their representatives are essentially arguing that lower milk prices in the supermarket will create an unsustainable market for the the dairy farmers to produce milk profitably. The inquiry continues in Melbourne.