Independent grocer group Harris Farm Markets is joining the backlash against cheap $1 a litre milk, pulling discount house brands from its shelves.
In a move it says is pitched at supporting the local dairy industry, Harris Farm has released its own Farmer Friendly Milk range selling for $2.29 for two litres.
The family-owned chain has locked in a supply deal with the 120-year-old Norco co-operative on the NSW North Coast which both parties consider gives shoppers and dairy farmer suppliers a fair deal for their milk.
Harris Farm Markets co-chief executive officer, Tristan Harris, said this week’s announcement followed several months of planning to ensure the best product at the best price – for all parties – was going on shelf.
“We understand people want good value on products they use lots of every day,” he said.
“However, we believe most don’t agree it should be cheap at all costs, including the costs of lives and livelihoods of Aussie farmers.”
The retailer is returning 95 per cent of the sale price back to the co-op which has about 220 supplier farms in NSW and Queensland producing more than 200 million litres of milk annually.
Mr Harris said co-ops were more transparent about their farm gate price which enabled his company to see a fair price was being paid to dairy farmers to reflect the true cost of production.
Although $1/litre milk has been a permanent fixture across the supermarket industry since early 2011 when Coles slashed its housebrand retail price to turbocharge its “Down Down” price campaign, consumers finally recognised the impact of cheap milk on dairy farmers this year.
Recent consumer spending data suggests supermarket sales of $1 milk have fallen significantly this year from about 65 per cent of all milk sold to 50pc.
With depressed export prices also weighing on the dairy sector, the impact of shoppers’ cheap milk buying habits really hit home when major processors Murray Goulburn and Fonterra slashed their promised farmgate payments in autumn and made suppliers repay money already paid to them early in the season.
Consumer lobby watchdog Choice has forecast Australians will spend an extra $113.7 million buying premium branded milk this year as part of a conscious effort to better reward producers for quality milk.
Until now Harris Farm has offered the Dairy Choice brand as its $1/litre answer to the competition from $1 house brands enthusiastically promoted by retail majors Aldi, Coles and Woolworths.
Dairy Choice, bottled by Japanese-owned national milk processor Lion, has been one of several milk brands sold by Harris Farm at various prices.
“Harris Farm Markets believes milk is a beautiful, natural product and should be sold at a fair price that doesn’t see farmers selling their milk for less than the cost of production,” Mr Harris said.
The company, which has 24 grocery stores in NSW, launched its Farmer Friendly Milk yesterday in two-litre bottles with full cream or lite options.
“Farmer Friendly Milk is a higher-quality (than its $1/litre counterpart) with a higher butterfat content of 3.6 per cent, so it’s creamier,” Mr Harris said.
“There isn’t the price pressure on the processor to extract as much of the butterfat to create margin in other dairy products.”
“As a family-owned business we wanted to make a difference where we do have control, and after seeing the uproar from farmers, advocates and the public on $1/milk earlier this year, we were compelled to change our approach to milk.”
He believed $2.29 for two litres of milk was “great value for customers, but not at the expense of farmers”.
Harris Farm Markets will still stock other milk lines from a variety of large and small suppliers.