One of Australia’s largest supermarkets has announced a large price hike to its branded milk which is bound to put more pressure on family budgets.
Coles says its own-branded 1 litre fresh milk will jump 25 cents from $1.35 to $1.60 a litre while the 2 litre bottles will increase to $3.10 from $2.60.
It is the most substantial one-off increase since the supermarkets introduced the controversial $1 a litre milk in 2011, which slashed the retail price milk by one third.
Coles, Woolworths and Aldi all bumped up their supermarket milk prices by 10c a litre in December last year.
This milk price rise was the first increase by the retailers in more than two years after all three last increased prices by 10 cents in July 2019 after ending dollar milk earlier that year.
Coles says “increases in sourcing, transportation and packaging costs, including a substantial rise in farmgate prices paid to dairy farmers” have caused the price rise.
It sources its milk directly from dairy farmers and also via dairy co-operative Norco, which supplies Coles Brand milk in northern NSW and southern Queensland.
The rise comes after record prices were paid to farmers by dairy processors for the new financial year, with values at farm gate hitting $10 a litre of milk solids.
Bega Cheese earnings down
Coles says the lift in retail prices is “in recognition of the higher costs being faced by dairy farmers” and the price it is paying farmers.
“This included an increase to the farmgate price paid by Coles this financial year, even for farmers with multi-year contracts already in place,” a statement from the company reads.
“Coles has been paying these higher prices since July 1.”
It comes as ASX-listed dairy processor Bega Cheese today issued a potential earnings downgrade to the stock exchange, citing a 30 per cent increase in the amount it was paying to dairy farmers after strong competition from other dairy companies for milk.