Dairy Cows at the North Coast National.
Dairy Cows at the North Coast National. Kelly McIlvenny

Coles announces direct marketing deal with dairy groups

SUPERMARKET giant Coles has announced two new direct deals with dairy farmer cooperatives in a move that may ease some of the tension between producers and the major retailer.

In a media release issued this morning, Coles said the deal would deliver better farm-gate prices and security to many dairy farmers on the east coast.

The new supply agreements with farmer-owned Australian dairy processors Devondale (Murray Goulburn Co-operative Co. Limited) and Norco, cover Coles Brand milk supply in New South Wales, south east Queensland and Victoria.

The Devondale agreement is for 10 years and the Norco agreement is for five years. Both come into effect in mid-2014 when Coles' contracts with existing dairy processors in these areas expire.

Arrangements in Western Australia, South Australia, Tasmania and Far North Queensland remain the same, Coles said.

Coles merchandise director John Durkan said customers wanted fresh Australian milk for their families and to know the price would remain affordable.

"Our job is to provide a quality product at a competitive price and at the same time ensure the dairy industry supplying Coles is strong, innovative and customer focused," he said.

"These new contracts with Australian farmer-owned businesses deliver on all these fronts."

Norco CEO Brett Kelly said the contract benefited dairy farmers and meant consumers could have greater confidence that there was a direct link from the farm to the supermarket shelf.

What has been called the milk price wars, which were initiated by Coles and mirrored by Woolworths, have been blamed for scores of dairy farmers leaving the industry in the past five years.

Late last month Woolworths announced a plan to deal directly with a group of farmers to secure milk supplies when it reported it was trialling a direct relationship with a group of farmers on the NSW mid-north coast.