With a number of milk processors announcing increases in opening milk prices for the next season, Coles is being pressured to stay "true to their word" and increase its payments to processors.
Fonterra, Murray Goulburn and Warnambool Cheese and Butter recently announced stronger opening milk prices, crediting the rise (20 percent, on average) to global demand and the weakening Australian dollar.
According to Queensland Country Life, the supermarket giant has "rise and fall" clauses in its private label milk contracts and has announcedit will ingredient processors' payments to reflect the higher farmgate prices.
"If they are true to their word the price for Queensland dairy farmers supplying Coles with fresh milk should see their price rise by at least 24 percent, which is the increase announced by Murray Goulburn," said Queensland Dairyfarmers' Organisation president, Brian Tessmann.
A Coles spokesperson said the company will be reviewing and substantiating claims and cost price rises and then deciding whether to absorb the increases or pass them onto consumers.
There's no doubt the dairy industry will welcome any move by the supermarkets away from their $1 pricing schemes, which have been heavily criticised by dairy farmers and are belived to have contributed to the collapse of two West Australian dairies, one being Lactanz Dairies, the state's biggest dairy producer.