The South Australian Dairy Farmers Association says a new partnership between a Victorian dairy processor and the retailer Coles will effectively cut the market in half which could hurt local dairies.
The Victorian co-operative Murray Goulburn, which represents thousands of eastern-state dairy farmers, has signed a 10-year supply deal with Coles to supply fresh milk for its home-brand label.
The president of the South Australian Dairy Farmers Association, David Basham, says the new agreement will not directly affect the state’s dairy farmers.
However, he says it takes a major buyer out of the market, which will force local farmers to be more competitive.
«My concern is that might drive prices down, rather than up … if they try to be more competitive to try and put a better deal on the table to maintain the business with Woolworths,» he said.
Mr Basham says the new partnership will effectively reduce the market by half.
He says he expects many of the state’s dairy farmers will look at changing companies.
«Some farmers might decide that they need to move away from those domestic players to the likes of Murray Goulburn to secure a price going forward,» he said.
Source: ABC.net
