Supermarkets have reduced the price of milk in Australia for the first time since 2011, raising concerns among farmers about a potential repeat of the 'milk wars' that severely impacted the dairy industry.
Coles and Woolworths dropped their generic fresh milk prices by 5 cents to $1.55 per litre, while Aldi followed suit in October, matching the reduction.
Dairy Farmers Victoria president Mark Billing expressed concern over the impact this price cut may have on farmers, noting that it devalues their product and could push many to financial hardship.
"It's extremely frustrating... margins are really, really tight," Billing said, highlighting the strain on farm management.
Australian Dairy Farmers — the peak body for dairy farmers — said retailers view milk as a "discount leader" to draw in customers.
Yet Coles and Woolworths claim the reduction reflects lower costs from milk processors with Woolworths stating, "We've reduced the price... to pass on the savings we're receiving from our processors."
However, Billing questioned the timing and strategy behind these price reductions as the Australian Competition and Consumer Commission (ACCC) pursues legal action against Coles and Woolworths over alleged misleading discount pricing practice.
Meanwhile, Australian milk production has hit a 30-year low, with many farmers leaving the industry.
Victorian dairy farms have dwindled from 7,409 around 2000 to just 2,796, with 8% of remaining farmers exiting last year. "Farmers are resilient, but there's a breaking point," Billing warned.