The Western Australian Farmers Federation says Coles' announcement that it will source more milk from WA is a positive step for the supermarket giant to repair its relationship with the state's dairy farmers.
Coles said it would source an additional 7.5 million litres of milk from Western Australian dairy farmers for its private label products, including cream, sour cream, yoghurt and custard.
WAFarmers dairy section president Peter Evans said dairy farmers had been under pressure since Coles slashed the price of its private label milk to $1 per litre.
“Coles' $1 per litre milk strategy is still a major issue, however if these new contracts result in additional product sales rather than a shift away from branded product to private label, then It will be a positive result for farmers,” Mr Evans said.
“While Western Australian farmers have not accepted Coles' claims that they are absorbing the costs of their heavy milk discounting, this announcement may help to lift Coles' standing amongst farmers.”
Mr Evans said WAFarmers would continue to monitor the price of Coles' private label products to ensure money remains in the WA dairy supply chain.