Supermarket shoppers are embracing milk brands directing more money back to farmers but the industry remains concerned about the supermarket milk price war.

Sale results for milk promising to return more cents per litre to farmers have reportedly surpassed expectations in South Australia and New South Wales, and returned some much needed confidence to the domestic dairy industry..

In South Australia, the dairy farmers’ association launched its own brand of milk called SADA Fresh.

South Australian Dairyfarmers’ Association president David Basham said milk sales had raised $20,000 a month for the South Australian industry since it began 15 months ago.

He said 20 cents from every litre sold goes into a dairy industry marketing fund.

“The fund we’ve established is a way of raising capital that we can invest back into the industry, to explore new markets,” Mr Basham said.

“We’ve been making $20,000 on average a month. For the first 12 months we had to pay back the investment.

“We’re more likely to target things that establish new markets; someone can investigate yogurt manufacturing, or a youth fund, to get new farmers into the industry.”

The system of delivering 20 cents a litre to fund new industry ventures is also operating in Western Australia, with the WAFF Farmers First milk brand launched late last year with Coles.

Farmers’ Own branded milk sales exceeding expectations

Seven New South Wales Manning Valley famers have a contract with Woolworths, delivering a premium directly to the suppliers.

Tim Bale in northern NSW set it up and said sales of the brand called “Farmers’ Own” are double Woolworths’ expectations.

“Well they have been growing all the time, in fact Woolworths is quite surprised, and 11 to 12 million litres a year is going into Farmers’ Own in NSW where Woolworths’ estimates originally were about 5 million.

“The other states that are rolling out this model with Woolworths: Queensland, from the Sunshine Coast hinterland, Victoria from the Otways, and soon from South Australia’s Barossa Valley.”

Queensland’s Mary River is launching a Farmers’ Own milk label with Woolworths tomorrow.

“At this stage, the milk will be available as far north as our Rockhampton stores,” said Ziggy Kwarcinski, Woolworths fresh food general manager.

“We’re looking for a local farmer and processor in Far North Queensland to serve our customers in that area.

“The whole idea of Farmer’s Own milk is to support local farmers so we are working hard to cover the whole state.”

Milk production down in Queensland

But for all that enthusiasm, some dairy farmers sound a note of caution.

In Queensland about 140 farmers have left the industry since the supermarket milk price war began four years ago.

“Woolworths can do what they wish, but if they say they’re supporting Queensland farmers, they need to explain how supporting two farms in Queensland supports all farmers,” said John Cochrane of the Premium Group, a collective milk bargaining group that negotiates between farmers and processor Parmalat.

Mr Cochrane said Queensland is 150 million litres short of milk this season, and the deal with Woolworths would not help.

“I chair a group of farmers and told Woolworths that we’d be more than happy to supply the milk and then all farmers would get a bit of Woolworth’s own milk,” he said.

Farmers buy milk bottling plant

Another group of farmers near the Gold Coast in Queensland have cut processors out of the supply chain.

The milk they process, called Scenic Rim 4Real, only sells in independent retailers.

Scenic Rim dairy farmer Greg Dennis built the milk bottling plant.

“We pay farmers a premium of 15-20 per cent a litre,” he said.

Mr Dennis said the $1 per litre milk campaign had hurt the Queensland industry.

“It is unsustainable, we’ve seen almost 30 per cent of Queensland dairy farmers leave the industry since the milk price war,” he said.

“We are trucking 100 million litres of milk from south of the Queensland border that we were not trucking three years ago.”

Generic brands have increased to now be 68 per cent of supermarket full fat milk sales, although closer to 50 per cent of the modified-milk sales.

A spokesman for Woolworths said it sells 50:50 generic to branded milk.

Despite a slight increase in milk sales nationally last year, the lower price paid for generic milk meant the value rose by only a marginal 0.6 per cent, to a total of $2.036 billion.

Extracted in full from ABC.