Farmers wary of Coles deal

COLES says it is improving conditions for farmers, but for local dairy producers the jury's still out on the com- pany's new milk deal.

The supermarket giant signed long-term deals worth $2.6 billion with dairy co-operatives Devondale and Norco on Wednesday.

John Saville, who owns a dairy farm near Nobby on the NSW Mid North Coast, said farmers would only benefit if Coles replaced its $1 per litre milk with a higher-priced product.

"If Coles are going to pay a premium on the milk and it's not going to go a dollar a litre, as long as that nonsense stops, it'll help the suppliers," he said.

"If this private-labelled milk goes in as cheap milk, it'll still have the same effect.

"Just as to what effect it will have on the other branded sales is the question."

Mr Saville said he saw the Coles deal mainly as a step to improve public relations.

"Being cynical, I'd say they've picked the two co-operatives for the PR exercise," he said.

"The country's littered with empty dairies.

"Probably in a 10-mile radius from here, in the last 10 years, there would be 10 gone."

Queensland Dairyfarmers Organisation president Brian Tessman said while the long-term nature of the deal was welcome, he was concerned about farmers during the transition to the new contracts.

"Overall, it doesn't change the fact that the market for milk up here, in the domestic industry, is not working," he said.

Topics:  dairy milk prices milk price wars supermarket price wars

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