Farmers’ group Australian Dairy Farmers says it has received enough shareholder signatures to compel supermarket giant Wesfarmers to hold an extraordinary general meeting on its controversial decision to slice the retail price of house-brand milk to $1 a litre.
ADF Vice President Chris Griffin told SmartCompany this morning he is expecting a response from the company within weeks, after collecting more than 100 signatures from Wesfarmers shareholders.
The farming body wants Wesfarmers to stop the price-cut on Coles milk, butter and cream, and explain how its pricing strategy for dairy products is consistent with its history as a cooperative.
It says the pricing is unsustainable for the 100,000-strong diary industry, most of which is based in Victoria.
A Wesfarmers spokesman says the company has received the letter and will respond soon. “We are considering our options,” he says.
Associate Professor Frank Zumbo, of the University of New South Wales School of Business Law & Taxation, says it’s important for Wesfarmers to recognise community concerns that the price cut will hurt farming communities, and eventually reduce the availability of fresh milk in Australia.
“It’s important that Wesfarmers is fully accountable and transparent in relation to what its subsidiary [Coles] is doing,” Zumbo says.
“The danger is potential damage to the Coles and Wesfarmers brands.”
Another ADF Vice President, Adrian Drury, says while the EGM might not stop the price-cut, it might succeed in showing there is community support for dairy farmers in Australia. “Ideally, it’d be great for shareholders to ask Coles to change their strategy,” Drury says.
Coles has said its price cut on milk is saving consumers $1 million a week.
A Senate inquiry into the milk-price said in an interim report this month that while lower prices are good for consumers, it is too early to say whether they would hurt farmers.
A final report is due on October 1.
Wesfarmers and Coles were contacted for comment, but were not available prior to publication.
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