Dairy farmer leaders from across Australia have united to call on Coles/Wesfarmers (ASX: WES) and Woolworths (ASX: WOW) supermarkets to use the opportunity of their appearance before the Senate Economics Committee tomorrow to publicly commit to ending their damaging retail price war on drinking milk.

Chairman of Dairy Farmers Milk Co-operative (DFMC), Ian Zandstra, said dairy farmers and industry leaders from across New South Wales, Queensland, Victoria and South Australia were gathering in Canberra today ahead of hearing of the Senate Economics Committee Inquiry in dairy retail prices on Tuesday.

“The Coles/Wesfarmers led price war is destroying value in every state of Australia right along the dairy supply chain. Coles and Woolworths must end their aggressive milk pricing, which is destroying the value of milk, reducing competition and negatively impacting returns to farmers,” said Mr. Zandstra.

“Tomorrow Coles needs to publicly admit its pricing strategy is damaging the industry and outline a plan for rebuilding fair value and competition in the drinking milk category. Woolworths has already stated the current pricing is unsustainable but they too need to explain how they will begin to resolve the issue in the interests of all Australians.”

The farmers in attendance include representatives of DFMC, Australian Dairy Farmers, Queensland Dairyfarmers Organisation, NSW Farmers' Association Dairy Committee, South Australian Dairy Association, Norco Co-operative and the National Foods Collective Bargaining Groups.

Farmers have traveled to Canberra from as far afield as the Flerieu Peninsula in South Australia up to the Atherton Tablelands in far north Queensland to demonstrate their commitment to the future of the industry and their opposition to the damaging supermarket pricing practices.

“Coles/Wesfarmers have argued that there needs to be more transparency in the dairy industry. We agree, it is time for Coles to reveal what its landed shelf cost of private label milk is in each state in order to prove it is not engaged in loss leading or predatory pricing,” said Mr. Zandstra.

“By selling milk at or below cost, Coles is squeezing out competition to its supermarket private labels from branded products and from milk bought from rival channels, such as milk bars, milk distributors and convenience stores. This is improper use of market power by Coles.

“Dairy farmers recognise that in tough economic times Australian consumers are looking for cost savings wherever they can. But we do not believe Australians want cheap milk if it means driving farmers off the land and threatening the viability of an entire drinking milk industry.”