Retail giants stood by their $1 per litre milk campaign at the senate inquiry hearing into the dairy industry on Tuesday.
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Supermarkets told the Economics References Committee that customers were the driving force behind cheap milk with processors ultimately setting the farmgate milk price.
Coles director Alister Jordan said the processors were not contractually obligated to supply the supermarket chain and it was customers who decided which brand they would buy.
“There is often speculation that Australia's retailers dictate farmgate pricing in the dairy industry. In our experience at Coles, that is not the case,” he said. “The processors that we deal with set the farmgate price.
“I want to be clear that processors are not obligated to contract with Coles to supply their milk and dairy products to our supermarkets.”
Senators Nick Xenophon and Skye Kakoschke-Moore asked if it was fair to say processors were not obliged to sell to the big two supermarkets when they didn’t “have too much other choice”.
Woolworths head of buying Steve Donohue said that for many budget-conscious customers, $1/L milk was an essential staple and added that 95 per cent of supplied milk was allocated to other dairy products.
“Our key driver in selling it at that price is to be competitive,” he said.
United Dairyfarmers of Victoria president Adam Jenkins said the responses of retailers and processors went round in circles.
“No answer was given about the impact of $1L milk on the farmgate milk price.”
Mr Jenkins said results from the ACCC inquiry would be welcomed instead.
“(The ACCC) has the power to subpoena documents and force retailers – not willing to give away commercially sensitive information – to give evidence,” he said.
The Standard, Warrnambool
