Woolworths are set to buy their milk directly from dairy farmers. Photo: Wolter Peeters
Woolworths is expected to unveil plans to buy milk directly from Australian dairy farmers as part of a campaign to demonstrate its concern about the viability of the industry despite offering $1 a litre milk under its own label.
The 'Farmers Own' brand is due to be announced at Sydney's Royal Easter Show on Wednesday with the milk acquired directly from dairy farmers at what is perceived to be a fair price. Milk processors - which the supermarket operators have traditionally bought their milk from - will process the milk on behalf of Woolworths.
The brand is expected to be introduced as a niche product at its supermarkets.
Woolworths has made it clear that it is no fan of the milk price war ignited by Coles in January 2011 with $1 a litre milk.
In its submission to a Senate inquiry into competition and pricing in the Australian dairy industry in 2011 Woolworths questioned the sustainability of the low prices.
An update from Dairy Australia last month indicated that the industry is still suffering the repercussions noting that average price for branded milk in supermarkets are "down, notably in the higher priced modified milks sub segments".
Dairy Australia said the recent introduction of private label permeate-free milk by Coles and Woolworths recently will probably influence pricing trends in coming months but added "interest in greater provenance is also likely to have some bearing on new supply and marketing arrangements for fresh drinking milk".
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