‘Unsustainable’: Norco jacks up milk prices amid troubled dairy supply chain concerns

Amajor milk company has announced a price hike to its dairy products, as rising costs continue to cripple farmers across the country.

In stark warning, farmers say their livelihoods are at risk, as surging diesel, fertiliser and transportation costs smash already thin margins.

Norco, a farmer-owned dairy co-operative, confirmed on Monday it would be hiking its prices up by five cents per litre to tackle the rising costs.

“We know we’re asking shoppers to pay a bit extra for their milk, but I want to assure them that this increase is directly supporting our farmers during these challenging times – with every cent flowing back to them and their regional communities,” he said.

“It’s also important to recognise that milk remains one of the most affordable staples in the Australian weekly shop – particularly when compared to other countries.

“For example, Woolworths’ own-brand 2L milk retails for around $1.50 more per bottle in New Zealand, roughly 45 per cent higher than in Australia.”

The price hike announcement comes as farmers warn the price of a key household staple is about to skyrocket and are urging the supermarket giants to “play fair” or risk the viability of Australia’s dairy industry.

Due to these higher input costs, Woolworths announced it would pay farmers directly linked to its Farmers Own Brand 10 cents more a litre, which will help around 20 farmers.

The nation’s largest dairy company Lactalis – which includes brands such as Ice, Oak and Pauls – will pay an additional five cents a litre to more than 800 farmers starting from May 1.

Australian Dairy Farmers president and dairy farmer Ben Bennett warns the current support from the supermarkets simply does not go far enough to help the industry.

“The supermarkets are just not playing a fair game. Woolies standing on the pillar of self righteousness, ‘oh, our 20 farmers we’ve given them 10 cents more’, but what about the other 3990 mate?”, Mr Bennett said to NewsWire.

“It is all very sanctimonious.”

A Woolworths spokesman acknowledged the pressure Australian farmers were under, but said households were also feeling the pinch and lifting prices would only add to this pain.

“We’re committed to doing what we can to buffer customers at the checkout and absorb some of those extra costs in our supply chains,” a Woolworths spokesman told NewsWire.

“We also recognise suppliers, Aussie farmers and transport partners are navigating difficult cost increases like the rise in fuel prices, and we are working to find the right path through.”

While Coles didn’t specifically comment on milk, the supermarket said there were pressures across several key agricultural input costs.

“We are continuing to work with our long-term, direct suppliers, including Australian farmers, to manage cost pressures, support continuity of supply, and smooth the impact on consumers,” a Coles spokesman told NewsWire.

Mr Bennett conceded “we need the supermarket”, as he called for a 20 per cent permanent rise in milk prices.

“It’s going to have to be a reasonably significant hit at the counter. The supermarkets get their pound of flesh, the government will get theirs before going down the supply chain,” he said.

“The farmer is at the very end and hopefully we will get something out of a 20 per cent pay rise.”

If Mr Bennett’s prediction comes true, the price of milk will rise from $1.65 a litre to closer to $2 per litre for the home brand product.

This would also have flow-on impacts to other parts of the dairy economy, with prices such as cheeses also likely to rise in line with higher milk costs.

But Mr Bennett said a bit of pain now for households would save a future headache for the industry.

“Farmers are pretty conservative, cautious and like to plan,” Mr Bennett said.

“We have a complicated farming system and we simply have to look after our girls. Sadly if we haven’t got enough funds coming in, we have to look after fewer cows.”

Mr Bennett warned the industry was already in decline prior to the start of the US-Iran war, with surging oil costs another hit to the industry.

Despite the federal government cutting the fuel excise tax in half, the average price of diesel has soared 77 per cent since the start of the war, to well above $3 a litre.

This is largely tied to the diesel‑yielding oil typically produced in the Middle East and exported to the rest of the world.

Mr Bennett said adding to farmers’ woes is the price of fertiliser that has soared from around $800 to $1800 a tonne, at the worst time for dairy farmers.

“Farming is seasonal. This time of year we put a lot of inputs into our farms. We used to regenerate about 20 to 25 per cent of our herds per annum.”

Mr Bennett said it takes three years to get a calf ready to milk for production purposes.

“In these sort situations, it could have a long-term impact on the supply of milk because the farmers will simply cull more cows,” he said.

“We get paid good money for our surplus cows … But the thing is we are in the game of milk not cows, so it is quick gratification to the bank balance to pay the bills but long term it is not so good.”