Dairy Australia misleads on Coles, Murray Goulburn disaster

Just who does Dairy Australia work for these days? Perhaps farmers might begin to ask them this very question.

We suppose it’s only fitting that Coles chief executive John Durkan has more front than a big box store. The Reptile, as he’s known around the dairy industry, was claiming in The Weekend Australian on Saturday that Coles is “the friend of farmers … because with no middlemen it all goes back to farmers”.

He cited Dairy Australia’s June 2016 Situation and Outlook report, which “found” the 2011 dawn of $1 milk had “encouraged more milk to be sold” and that the industry is “$235 million better off because of this resulting growth in milk sales” (the correct number from DA’s report is actually $325 million).
We’ve read the S&O report and it is an astoundingly defective piece of research, the selectivity of its samples and modelling worthy of Coles’ own YouTube video on $1 milk, which Rod Sims decided had made claims that “could not be substantiated”.

Despite its press release assertion that $1 milk is a net good, the report doesn’t even attempt to provide any meaningful data as to the direct impact of $1 milk on farmers, only that total milk sales have not decreased. Which isn’t the point.

Any two-eyed analysis of the stats would tell you that gross milk sales (in dollars) have increased by 7.6 per cent over five years, but the volume of that milk sold, in litres, has increased by a greater 9.3 per cent. And the average price per litre sold has in fact fallen by 1.6 per cent, while the consumer price index over that five years has risen by 12.2 per cent. So in actuality, since $1 milk first hit the shelf, the gap between the shelf price and inflation is a whopping 13.8 per cent, the equivalent of $717 million of revenue lost, not $325 million gained, to the value chain. In that same period, underlying population growth was 7.9 per cent – higher than the total sales increase – and per capita consumption, while growing in the first three years, has indeed begun to fall.

None of that made any sense to you? Basically, Dairy Australia has used the fat sales margins of flavoured milk (a burgeoning segment) to prop up the shelf price of all milk yet then misleadingly presented those numbers as proof that private label drinking milk is not bad for farmers. It’s plain bullshit.

Which begs the question: why would DA, a body funded by a levy on farmers and whose stated mission is to help them “achieve a profitable, sustainable dairy industry”, attempt such a flimsy piece of analysis? Can it merely be coincidence that its biggest (thus most powerful) member, Murray Goulburn, chaired by Philip “Stability” Tracy (Durkan’s favourite middleman) and whose director Natalie Akers is married to DA chair Geoff Akers, is under immense public and shareholder pressure over the commercial crunch it has foisted on its farmer-members? And that Tracy’s biggest (thus most powerful) revenue source, Coles, led by Durkan (who reports in to Wesfarmers chief Richard Goyder, whose grasp of reputational risk is acute), is bleeding out as shoppers boycott private label milk while unleashing bile at every customer touchpoint.
Just who does Dairy Australia work for these days? Perhaps farmers might begin to ask them this very question.

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