In the past Coles has relied on dairy processors to purchase milk from farmers to supply for Coles Brand milk, under contracts that allow the processor rather than Coles to set the farmgate price.
Under the new sourcing model, Coles will offer the competitive farmgate price directly to farmers. Coles will pay dairy processor Saputo to process and bottle under a toll processing agreement.
The supermarket giant will also offer contracts with locked in prices for two years and a floor price in the third year with flexible options of supply, allowing greater certainty of income for local dairy farmers.
Coles Chief Operating Officer Greg Davis says Coles was proud to be collaborating directly with Australian dairy farmers to purchase their high-quality milk and strengthening the sustainability and long-term resilience of dairy farm suppliers.
“In addition to offering a fair and competitive price, dairy farmers will have more choice regarding the length of contract and more certainty around income,”
“Over many years, Coles has developed direct relationships with thousands of meat, seafood and fresh produce farmers supplying to our stores; it is a successful model, and we think it can work in dairy too.”
The new sourcing model is expected to begin next month